By Doina Chiacu and Richard Cowan
WASHINGTON (Reuters) – Hope grew on Wednesday for a deal to avoid the United States imposing tariffs on Mexican goods in return for Mexico doing more to halt illegal immigration but President Donald Trump said he was willing to go ahead with the import duties if he is not satisfied.
Trump said he thinks Mexico wants to reach an agreement to stop a new trade war – one that analysts believe might tip its economy into a recession – while a White House trade adviser and senior Republican U.S. lawmaker predicted that Washington might not introduce the proposed tariffs.
“Mexico can stop it. They have to stop it, otherwise, we just won’t be able to do business. It’s a very simple thing. And I think they will stop it. I think they want to do something. I think they want to make a deal, and they sent their top people to try and do it,” Trump said at the start of a visit to Ireland.
Frustrated by the lack of progress on a signature issue from his 2016 election campaign, Trump unexpectedly told Mexico last week to take a harder line on curbing illegal immigration or face 5% tariffs on all its exports to the United States starting on Monday, rising to as much as 25% later in the year.
Mexican officials will seek to persuade the White House in talks hosted by U.S. Vice President Mike Pence on Wednesday that their government has done enough to stem immigration and avoid tariffs. Mexican President Andres Manuel Lopez Obrador said he was optimistic the talks can end in an agreement.
Trump said he would go ahead with the tariffs if Mexico does not do more to control migration.
Lopez Obrador has received an official list of U.S. products that could be subject to retaliatory tariffs if the duties threatened by Trump take effect, officials said in Mexico City.
Trump has faced resistance within his own Republican Party over the threatened tariffs, with many lawmakers concerned about the potential impact on cross-border trade and on U.S. businesses and consumers.
White House trade adviser Peter Navarro told CNN Trump’s threatened tariffs might not be needed.
“We believe that these tariffs may not have to go into effect precisely because we have the Mexicans’ attention” on stemming illegal immigration, Navarro said.
If the tariffs go ahead, the United States would be in a serious dispute with two of its three top trading partners. U.S. relations with China have worsened in the past month as Washington and Beijing have imposed additional tariffs on each others’ imports.
Mexican officials will offer a “long list of things” in Wednesday’s talks to avoid the duties, said Chuck Grassley, Republican chairman of the U.S. Senate Finance Committee. Grassley said a possible deal could be announced on Thursday night.
Grassley represents the farming state of Iowa, which exports pork and other agriculture products to Mexico and might be hit by Mexican retaliation in a prolonged trade dispute.
Some Republicans have told the White House not to count on the same level of support within the party that Trump received earlier this year when the president declared a national emergency to divert funds to build barriers at the border. Democrats opposed that move.
The proposed tariffs also have been criticized by the U.S. Chamber of Commerce and industry groups due to concerns about increased costs for U.S. businesses and consumers of imported Mexican goods from cars and auto parts to beer and fruit.
The number of people apprehended on the U.S.-Mexico border is at the highest monthly level in more than a decade but is still lower than at other peak periods of illegal immigration since the 1970s. U.S. authorities have said they are overwhelmed not so much by the number of migrants but by a shift in the type of person turning up at the border in recent years. Increasing numbers of Central American families and unaccompanied minors seeking asylum after fleeing criminal violence in their home countries have been turning themselves in to U.S. border agents, who have long been geared up to catch mainly single, adult Mexicans trying to cross clandestinely.
Mexican Foreign Secretary Marcelo Ebrard will attend the talks on tariffs and immigration scheduled in Washington on Wednesday afternoon. He is expected to try to show the White House that authorities are taking steps to stem the flow of migrants, with Mexico detaining double the number each day than it was a year ago.
Leftist Lopez Obrador has said he wants to persuade Washington to help tackle the causes of migration by investing in Central America to create jobs and speed up economic development.
Tariffs could slow another type of migration: the more than 1 million cows exported by Mexico across the border each year that become part of the U.S. beef supply. Tariffs on cattle crossing the border could raise costs for U.S. meat producers and processors, ranchers and economists said, particularly in border states such as New Mexico and Texas.
Pence is looking for a comprehensive suite of proposals from the visiting officials about stopping the flow of migrants from Central America, a White House official said.
“Trade and all other aspects of our relationship are critically important, but national security comes first and the White House is dead serious about moving forward with tariffs if nothing can be done to stem the flow of migrants,” the official said, speaking on condition of anonymity.
The Mexican economy will likely slip into recession this year if Trump follows through on his tariff threat, a Reuters poll of market analysts showed.
An industry source who has met with the Mexican delegation said that ideas being floated to solve the dispute are more border controls and joint security exercises on Mexico’s southern border with Guatemala, which Central American migrants pass through on their way to the United States.
(Reporting by Doina Chiacu, Alexandra Alper, Roberta Rampton, Richard Cowan and Susan Cornwell in Washington, Steve Holland in Ireland, Dave Graham,; Noe Torres and Sharay Angulo in Mexico City, and Gabriel Burin in Buenos Aires; Writing by Alistair Bell; Editing by Will Dunham)