GOP lawmakers, business groups slam Trump's Mexico tariff threat

The president's tariff threat was "hurried out the door" by White House aides to appease him, an administration official said, with no guidance on how to explain the move to the business community.
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By Rebecca Shabad, Geoff Bennett, Kristen Welker and Kayla Tausche

WASHINGTON — Several Republicans in Congress and major business groups on Friday slammed President Donald Trump’s threat to impose a 5 percent tariff on all Mexican goods starting next month, warning that the move would hurt both the U.S. economy and the chances of Congress approving a major trade deal with Mexico and Canada.

The president said Thursday that the tariffs would rise monthly to as high as 25 percent unless Mexico “substantially stops” the number of migrants entering the U.S. illegally.

A senior administration official and two sources familiar said business groups and federal agencies were not informed of the president’s tariff threat ahead of time. A fourth source familiar said the relevant congressional committees were not notified.

Trump's threat was "hurried out the door" by White House aides to appease the president, an administration official said Friday. Behind the scenes, the official said there has been some "squabbling at the staff level" about the threat and potential blowback to the USMCA and overall economy. A second administration source described the situation as "flying blind" and there was no internal guidance on how to explain the tariff threat to the business community.

The tariff strategy was spearheaded by White House adviser Stephen Miller, two sources said, who had Trump’s ear on his trip last weekend to Japan. Trump returned from Japan “riled up” about the surge in border crossings, due to Miller's input and comments made by conservative talk show host Mark Levin.

When asked if the process was rushed, a senior White House official told NBC News, “I’m sure that’s true,” acknowledging that “the process was on a short timeline.” This official said there is more that could have been done to preview the president’s plans to the administration and Congress: “I don’t think that’s in question.”

Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer opposed President Donald Trump’s threatened tariffs on Mexico, according to a source close to the White House. A second source familiar confirmed Mnuchin’s objections.

The U.S. Chamber of Commerce confirmed in a press conference call Friday that it is exploring all legal options, including filing a lawsuit against the White House. Sources at other business groups say they are exploring litigation and legislative options, as well.

“If the president goes through with this, I’m afraid progress to get this trade agreement across the finish line will be stifled," Sen. Joni Ernst, R-Iowa, said in a statement Friday. "While I support the need for comprehensive border security and a permanent fix to illegal immigration, this isn’t the right path forward.”

The senior senator from her state, Chuck Grassley, also a Republican and the Senate Finance Committee chairman, blasted Trump’s decision and even suggested that he was abusing his presidential authority.

“Trade policy and border security are separate issues,” Grassley said in a statement Thursday night. “This is a misuse of presidential authority and counter to congressional intent. Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country.”

Sen. Pat Toomey, R-Pa., said Friday that the tariffs are the “wrong remedy” and “misguided."

“The president is right to point out the crisis at our southern border. However, a blanket tax increase on everything Americans purchase from Mexico is the wrong remedy," he said in a statement. "Tariffs are a dangerous and risky economic tool."

Rep. Justin Amash of Michigan, the lone Republican lawmaker calling for impeachment proceedings against Trump, derided the president and his congressional supporters in a tweet Thursday.

“How many times will Congress let the president unilaterally raise taxes on Americans? All the times,” Amash said.

Senate Majority Leader Mitch McConnell, R-Ky., stopped short of criticizing the tariffs announcement, but did not back it either, saying only that he would discuss the proposal.

"There is a serious humanitarian crisis at our southern border, and it is past time for my Democratic colleagues to finally get serious about meaningful action," he said in a statement Friday. "As our third biggest trading partner, a healthy and vibrant economic relationship with Mexico is a vital source of our joint prosperity. Any proposal that impacts this relationship deserves serious examination and I look forward to discussing this plan in greater detail with my colleagues and the administration."

As lawmakers remained in their congressional districts for a weeklong recess, most Republicans maintained silence over the announcement.

A few voiced support for it, including Sen. Lindsey Graham, R-S.C., who said that he backs Trump and that the “illegal flows from Central America must stop and Mexico needs to do more.”

“If Mexico does not do more we will have over a million illegal immigrants from Central America next year. I don't like tariffs but in this case it is a national security issue and Mexico needs to change their behavior,” he tweeted.

The president staunchly defended his position on Friday, tweeting that it’s “about stopping drugs as well as illegals!”

In a letter to Trump Thursday night, Mexican President Andrés Manuel López Obrador said that his country would not retaliate, but suggested that the new policy would not be effective, saying that, “Social problems don’t get resolved with duties or coercive measures.”

Major U.S. business groups said that the move would have negative consequences.

“These proposed tariffs would have devastating consequences on manufacturers in America and on American consumers,” the CEO and president of the National Association of Manufacturers, Jay Timmons — whose group backs the United States-Mexico-Canada Agreement, known as USMCA, and supported the 2017 GOP tax cuts package — said in a statement. “We have taken our concerns to the highest levels of the administration and strongly urge them to consider carefully the impact of this action on working families across this country.”

Business Roundtable, a group of CEOs of major corporations, sounded a similar note. “Imposing unilateral tariffs on Mexican imports would be a grave error," the group said in a statement, adding that it "strongly urges the administration not to move forward with these tariffs, which would create significant economic disruption and tax U.S. workers, farmers, consumers and businesses.”

Asked if the USMCA is effectively dead, a senior White House official said, "It's too soon to say that." The hope is that Mexico will take action to decrease border crossings before the end of the summer, the official said, giving the White House and Congress a chance to move forward on the deal.

White House acting chief of staff Mick Mulvaney told reporters in a conference call Thursday that the decision would not affect the trade deal.

“No, the two are absolutely not linked,” he said. “This president will defend the nation. He will defend the southern border. If that means taking the tariffs to 25 percent, that means taking the tariffs to 25 percent. We hope — sincerely hope — it does not come to that.”

A few hours before the tariffs announcement Thursday, Lighthizer had sent a letter to congressional leaders to begin the ratification process of the USMCA, and Mexico’s president had formally asked Mexico's Senate to ratify the deal.

House Speaker Nancy Pelosi, D-Calif. suggested in a statement following the administration's move on the trade pact Thursday that that action had been premature, adding Friday that Trump's latest threat suggested he did not understand the situation.

"Yesterday, the President demonstrated his lack of knowledge of policy and process in our trade relations by taking premature action to advance the USMCA," she said in a statement. "Later in the day, he demonstrated a further lack of understanding of the recklessness of his actions by threatening tariffs on Mexico. The President’s threat is not rooted in wise trade policy but has more to do with bad immigration policy on his part."

Rebecca Shabad

Rebecca Shabad is a congressional reporter for NBC News, based in Washington.

Geoff Bennett
Kristen Welker

Kristen Welker is a White House correspondent for NBC News.

Kayla Tausche

Kayla Tausche joined CNBC in January 2011 as a general assignment reporter covering corporate finance and deals for CNBC's Business Day programming.

Hans Nichols and Leigh Ann Caldwell contributed.