International, Tariffs

International Market Update: Are Mexico Tariff Changes Possible?

By Averitt Express on May, 31 2019
Averitt Express

As many shippers may have noticed or heard at the end of May, President Trump has announced a plan to implement new tariffs on ALL goods arriving from Mexico beginning as soon as June 10, 2019. The duty rates would start at 5% on June 10 and increase monthly by an additional 5% until they reach 25% or until Mexico does enough to satisfy the President's requests that they do more to stem the flow of illegal immigrants through their country.  

There is much discussion happening, but nothing substantive that can be shared related to an actual plan of action.  Several media outlets have posted commentary, but little is known with any certainty. However, many shippers are understandably concerned and have questions. Here are some perspectives to consider:

First, it is very difficult to implement a brand new tariff in a matter of days, so expect that the proposed deadline will very quickly have to be pushed back to a later date.

Second, Mexico has just sent a team of representatives to Washington to try and defuse this situation. They should be arriving on May 31, and talks should start immediately. By taking such swift action, Mexico will gain at least some level of delay in the imposition of these duties. Since all parties would likely need more time to put them in place regardless, this seems to be a reasonable expectation.

Third, assuming Mexico is able to commit to specific steps they will take to alleviate the problem, shippers should expect some kind of probationary period to ensue where they are given a month or so to prove their effectiveness. As long as it seems clear to the administration that Mexico is taking things seriously and taking concrete steps to harden their borders, these tariffs may be delayed, but the threat of them being imposed with little notice will continue.

Fourth, the above are simply speculations ....  Averitt will continue to keep you advised as we hear more. But, for now, please know that our associates are monitoring the situation closely and will advise you of anything we learn.
 
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