The imposition by the US of 5% tariffs on goods imported from Mexico aimed at encouraging further action from the Mexican government against illegal immigration across the border will have far-reaching consequences, an expert in global finance has warned.
Professor Sunil Poshakwale, Professor of International Finance at Cranfield School of Management, said President Donald Trump’s decision to impose tariffs would impact US-Mexican trade and global business, as well as potentially hit the pockets of American citizens themselves.
He said: “Mexico is the second largest exporter to the US. Last year, it exported US$371.9bn of goods and services to the US. Imposition of tariffs has the potential to increase inflation in the US, as the price of products imported from Mexico will cost more. This, together with the increased tariffs on the US$250bn of goods the country imports from China, will contribute to inflationary pressures in the US.
“It was only in November that the US signed a new Canada-United States-Mexico Agreement (CUSMA), which ensures that tariff-free access to each other’s markets is maintained. This decision implies a lack of policy co-ordination and does not bode well for the credibility of US agreements going forwards.”
“The imposition of tariffs on Mexico will also increase concerns that the US stance on trade is reflective of broader protectionism rather than limited to curbing Chinese trade competitiveness,” he added.