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Update: No Import Tariffs on Mexico on June 10

Monday, June 10, 2019
Sandler, Travis & Rosenberg Trade Report

President Trump has announced that the five percent tariff scheduled to be imposed June 10 on all imports from Mexico has been “indefinitely suspended” in light of a bilateral agreement to work toward a “durable solution” on “irregular migration” from Mexico to the U.S. The two sides said they would “continue their discussions on the terms of additional understandings,” which will be “completed and announced within 90 days, if necessary.”

The announcement resolves for now questions about whether and how the tariff would be imposed on June 10. Nicole Bivens Collinson, president of international trade and government relations for trade and customs law firm Sandler, Travis & Rosenberg, was quoted in a Yahoo Finance article as stating that U.S. Customs and Border Protection had been given “no instructions from the White House” on how to reprogram its computers and make the other changes necessary to start collecting tariffs on goods that have been duty-free for decades under NAFTA.

Lenny Feldman, a customs attorney with ST&R who serves on CBP’s commercial operations advisory committee, added in a CNN article that there were also questions about how exactly the tariffs will be applied; e.g., whether the value of U.S. components in goods manufactured in Mexico would be subject to or excluded from the tariffs.

Customs brokers said in a June 5 letter that it would be “impossible to comply” with the new tariff “as the mechanisms of compliance are not available between now and June 10, or even before the increase planned for July 1.” For example, the CNN article noted, “many importers don’t have accounts to pay tariffs” and CBP has “warned of growing backlogs of up to three weeks for new applicants.” As a result, the brokers requested that the tariffs be postponed “until CBP can develop the procedures by which importers and brokers can reasonably pay them.”

In addition, there is growing congressional opposition to the Mexico tariffs and lawmakers are considering measures to prevent them. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said the tariffs are “a misuse of presidential tariff authority and counter to congressional intent.” Senate Finance Ranking Member Ron Wyden, D-Ore., added that the tariffs will be “paid by American consumers” and that “the retaliation we should expect from Mexico will harm American workers.” House Ways and Means Committee Chairman Richard Neal, D-Mass., said he would introduce a resolution of disapproval if Trump declares a national emergency to justify the tariffs, and press sources indicate that there appears to be growing support behind such an effort.

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