US Chamber of Commerce Won’t Rule Out Court Challenge to Block Mexican Tariffs

To stem the influx of migrants at the southern border, Trump will use his authority under the 1977 International Emergency Economic Powers Act (IEEPA) to impose 5 percent tariffs on Mexican imports starting June 10, he said Thursday. “If the crisis persists,” he will hike the tariffs to 10 percent on July 1, to 15 percent on Aug. 1, to 20 percent on Sept. 1, and to 25 percent on Oct. 1, he said. “Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory.”

The Chamber can’t comment on the possible legal grounds on which it would mount a court challenge, Bradley told us. “That’s what we’re exploring at this moment,” he said. “Obviously, given the gravity of the situation, we have to explore all of our options, and all the options that might be available.” The White House didn’t comment.

A "number of lawsuits seeking to overturn actions taken pursuant to IEEPA have made their way through the judicial system," the Congressional Research Service reported in March. Much of the litigation involved "challenges to the breadth of congressionally delegated authority and assertions of violations of constitutional rights," said CRS. "Most of these challenges have failed. The few challenges that succeeded did not seriously undermine the overarching statutory scheme for sanctions."

Asked whether the Chamber would challenge the tariffs on its own or seek the backing of other groups, Bradley said the Chamber “along with the rest of the world” learned of the tariffs threat only late Thursday. It since began “due diligence to explore all available options, but beyond that I can’t comment further,” he said.

“There’s no question that we have a very real problem at our southern border,” said Bradley. “Tariffs, which are nothing more than taxes that are going to be paid by American businesses and consumers, will do nothing to address the real problem at the southern border. It’s quite likely they will actually make the problem worse with the steep costs to American families and businesses.”

A 5 percent tariff on Mexican goods would hit the U.S. economy with $17 billion annually in “new taxes,” said Bradley. “At 25 percent, it’s $86 billion in new taxes. There is no doubt that that will have a negative ripple effect through our economy.”

Mexico “has recently become the number one trading partner of the United States,” said John Murphy, the Chamber’s senior vice president-international affairs. “The danger here of further trade tensions is real.” The threat of Mexico tariffs “creates a major new hurdle” to congressional approval of the U.S.-Mexico-Canada Agreement (USMCA) on free trade, said Murphy.

Earlier Friday, CTA and the Information Technology Industry Council both attacked the new Mexican tariff threat as detrimental to U.S. interests. The tariffs are “potentially devastating to American small businesses and all the people they employ,” said CTA President Gary Shapiro. “Mexico is not only one of our top trading partners, it's the number one export market for American consumer technology sector products.” If Mexico retaliates with tariffs of its own, he said, U.S. “employers and workers will end up paying twice over for the administration's misguided trade policies."

ITI thinks tariffs on Mexico “are not an appropriate tool to address serious immigration challenges,” said President Jason Oxman, who used to work at CTA's predecessor. “The most effective way to address these concerns is for the administration and Congress to pass a permanent solution to fix the United States’ broken and outdated immigration system.”

The Computer & Communications Industry Association echoed fears the Chamber's Murphy also expressed that the Mexican tariff threat risks endangering congressional USMCA ratification. That threat to impose tariffs "is counter-productive in light of the USMCA and recent steps taken by all parties to implement the updated agreement," said CEO Ed Black. "The blunt tool of tariffs will harm American consumers and industries, and risks the full realization of the benefits of a modern trade agreement that brings the North American market into the 21st century.”

Many National Electrical Manufacturers Association member companies "operate on both sides of the U.S.-Mexico border," said CEO Kevin Cosgriff. They have built "highly integrated, efficient, and valuable supply chains over the last two decades," he said. "The efforts of our respective governments and industries should be defined by greater collaboration in addressing shared challenges, so recently exemplified" by the USMCA, he said.​​

The Telecommunications Industry Association is “extremely concerned about the mounting costs of tariffs for U.S. consumers and business,” said Cinnamon Rogers, senior vice president-government affairs. “Tariffs on Mexican products will be disruptive to business and damaging to confidence. We would urge the President and Congress to find a long-term, sustainable legislative solution to improve U.S. immigration policy.”

Threatening tariffs on Mexican imports "while simultaneously seeking support in Congress for a trade deal aimed at keeping trade barriers low with Mexico is a confusing and counterproductive strategy," said Hun Quach, Retail Industry Leaders Association (RILA) vice president-international trade. "Whether the rhetorical target is Mexico or China, the bill is adding up for American consumers who will pay the price for these tariffs." RILA's members include big-box retailers Best Buy, Walmart and Target, all of which now face the double-barreled threat of tariffs on goods from China and Mexico.

The administration’s “surprise announcement” threatening Mexican tariffs “creates another headwind” for remote-control maker Universal Electronics, wrote Dougherty & Co. analyst Steven Frankel in an investor note Friday. Universal is in the midst of an accelerated shift of manufacturing from China to facilities in Mexico in reaction to the Section 301 tariffs imposed last year (see 1902060055), said Frankel.

Tariffs on Mexican goods won’t affect Universal's cash flow, but “gross margins may be impacted if the tariffs last more than a month or two,” said Frankel. Despite tariffs amounting to what Frankel called a “potential short-term disruption,” Dougherty & Co. remains "buyers” of Universal stock, he said.

The threat of Mexican tariffs is "part of business,” a Universal spokesperson told us Friday. “These things happen all the time.” The Universal “operations team will watch it, but it’s a little premature because it’s not even happened,” she said. “We did react quickly and positively when the issue became real regarding China, and certainly we’ll make decisions should something happen” on the Mexico tariffs, and will “continue to manage the company well,” she said. The stock closed 5.5 percent lower Friday at $39.39.