Donald Trump has announced tariffs on all goods coming from Mexico as he dramatically ramped up his battle to end illegal immigration.
The US leader said that a five per cent tariff would be imposed in just over a week and that the percentage would slowly rise until “the illegal immigration problem is remedied”.
President Trump’s decision, announced in a tweet, was a direct challenge to the Mexican President Andres Manuel Lopez Obrador and appeared to take the Mexican government by surprise.
Mr Trump wrote: “On June 10th, the United States will impose a 5 per cent Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied.”
It raised the risk of deteriorating economic relations between two neighbours heavily dependent on the cross-border flow of goods. It also opened up a new front on trade as the Trump administration struggles to conclude a trade deal with China.
Higher tariffs will start at 5 per cent on June 10 and increase monthly until reaching 25 per cent on Oct. 1, unless Mexico takes immediate action, Mr Trump said.
The announcement rattled investors who feared that worsening trade frictions could hurt the global economy. The Mexican peso, US stock index futures and Asian stock markets tumbled on the news, including the shares of Japanese automakers who ship cars from Mexico to the United States.
"We're in a good moment building a good relationship (with the United States) and this comes like a cold shower," said Mexico's deputy foreign minister for North America, Jesus Seade.
US officials said 80,000 people are being held in custody with an average of 4,500 arriving daily, overwhelming the ability of border patrol officials to handle them.
A senior White House official said Trump was particularly concerned that US border agents apprehended a group of 1,036 migrants as they illegally crossed the border from Mexico on Wednesday. Officials said it was the largest single group since October.
Agencies contributed to this report
