Donald Trump’s Proposed Tariffs On Mexico Would Create Biggest Tax Hike In 30 Years, Report Finds

A shot of the U.S. border fencing.
Joe Raedle / Getty Images

Donald Trump has threatened to levy tariffs on Mexico in the coming weeks, ones that a new report claims would create the largest tax increase on American consumers in nearly three decades.

The right-leaning Washington think tank Tax Foundation studied the effects of the proposed 5 percent tariffs on Mexican goods that the Trump administration announced would go into effect starting June 10, with the number increasing until it reaches 25 percent. Trump threatened to levy the tariffs in order to force Mexico to stop allowing migrants from traveling through Mexico and into the United States.

The effect of the new tariffs could have a detrimental effect on the American economy, the report noted. The Tax Foundation noted that the 5 percent tariff would increase tax revenue from American consumers to roughly 0.40 percent of GDP, the largest tax increases since the start of Bill Clinton’s tenure in office.

Donald Trump has frequently said that tariffs bring revenue directly into the U.S. Treasury, though experts point out that the true costs are paid by consumers in the form of higher prices to cover the increased taxes.

“The Tax Foundation model estimates that if the Trump administration imposes additional tariffs on automobiles and parts, additional tariffs on products from China, and tariffs on products from Mexico, GDP would fall by an additional 0.50 percent ($124.82 billion), resulting in 0.33 percent lower wages and 387,041 fewer full-time equivalent jobs,” the foundation states.

There is some concern that members of Trump’s own party may come down against the tariffs. As Maggie Haberman of the New York Times noted, Republican Senator Chuck Grassley has given indications that he may move to curtail Trump’s tariff power.

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The Trump administration has also been criticized for its trade war with China, which have had impacts on American farmers. The measures have come under attack by Wang Shouwen, the deputy head of Beijing’s negotiation team, who lashed out against the Trump administration.

It was not yet clear if Donald Trump would go through with the new tariffs on Mexico. The president has used threats of new tariffs and increasing trade wars as something of a negotiation tactic, and there already appears to be a response from Mexico. As CNBC reported, Mexican president Andres Manuel Lopez Obrador said he was prepared to increase measures to contain migration and reach a deal with the United States.

Obrador was planning to send a delegation to Washington this week to discuss the ongoing dispute and attempt to reach a resolution before the tariffs could go into effect.