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Trump suggests car import tariffs in latest threat to Mexico

WASHINGTON

U.S. President Donald Trump on Thursday threatened to eventually slap tariffs on car imports from Mexico unless it does more to stop drug trafficking, in his latest warning to America’s southern neighbour to tighten border security.

After backing away from a threat this week to immediately shut the border if Mexico does not do enough to halt illegal immigration, Trump gave the country a deadline to do more to stop drugs or face tariffs.

“We’re going to give them a one-year warning, and if the drugs don’t stop, or largely stop, we’re going to put tariffs on Mexico and products – in particular cars. The whole ballgame is cars,” Trump told reporters. He also suggested that future tariffs could be linked to Mexico helping fight illegal immigration.

Trump prompted panic among business leaders last Friday by saying he would likely close the border this week to deal with a surge of migrants from Central America, but has since walked back the threat.

Trump’s remarks briefly pushed auto shares lower before they rebound. The S&P 1500 automobiles and components index was up 1.6 percent in Thursday afternoon trading, outperforming the S&P 500, which was little changed. Shares of General Motors Co and Ford Motor Co were both up about 1.2 percent each.

Trump made stopping illegal immigration a centrepiece of his 2016 run for the White House, pledging to build a wall on the border to stop migrants. When Congress refused to give him the money to pay for the wall, he declared a national emergency to divert funds from other projects.

The Democratic-controlled House of Representatives will sue to block Trump from “stealing from appropriated funds,” Speaker Nancy Pelosi said on Thursday.

Trump, who plans to visit the border at Calexico, California to view a border wall project, said that media coverage this week had prompted Mexico to act to curb the flow of immigrants to the United States and take other action to ease the pressure on U.S. ports of entry.

“A lot of good things are happening with Mexico. Mexico understands that we’re going to close the border, or I’m going to tariff the cars,” he said.

TRADE DISRUPTIONS

U.S. border officials have estimated that some 100,000 migrants were apprehended or encountered at the border in March, the highest level in a decade. Most are Central American families seeking asylum.

The Department of Homeland Security has transferred 750 border agents from commercial to immigration duties, triggering long delays for cross-border trade.

The U.S. Chamber of Commerce said it welcomed Trump’s decision not to close the border, but said Congress needed to do more.

“Congress should also ensure Customs and Border Protection officials receive the resources they need to reduce the excessive wait times affecting legitimate trade and travel across the border,” said Neil Bradley, a top official with the Chamber in a statement.

Mexican exporters are looking into sending their goods to the United States by air freight to avoid a five-mile (8-km)-long line of trucks at the border caused by the Trump administration moving federal agents away from customs checks to immigration duties.

Auto parts and medical equipment makers were among the Mexican companies considering the more expensive air cargo to avoid incurring penalties for late delivery to U.S. clients or factory closures, Luis Aguirre, the president of Mexico’s manufacturing industry chamber INDEX, said late on Wednesday.

(REUTERS)

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