President Donald Trump escalated his abrupt tariff threats against Mexico on Friday, triggering alarm about the likely economic fallout, spooking global markets and raising the prospect of US trade wars on multiple fronts.
Trump unexpectedly announced his readiness to levy tariffs on all Mexican imports, beginning at five percent starting June 10 and rising monthly to as high as 25 percent until Mexico substantially reduces the flow of illegal immigration.
Mexico's President Andres Manuel Lopez Obrador said Friday that his country was "doing our job" to stop the flow of undocumented migrants to the United States, and warned Trump that hitting his neighbor with tariffs would be a lose-lose game.
But the US leader then doubled down on his threats, saying in a flurry of tweets that "Mexico has taken advantage of the United States for decades."
The impact of new tariffs would be devastating for Mexico, which sends 80 percent of its exports to the US.
Lopez Obrador reminded his American counterpart the tariffs would also take a heavy toll on the United States, whose largest trading partner so far this year is Mexico -- thanks mainly to Trump's trade war with China.
Earlier this month Trump, angered by what he deemed unfair Chinese trade practices, raised punitive duties on $200 billion in Chinese imports. Beijing has promised retaliation.
Effects of the Mexico tariffs would ripple across multiple economic sectors, including the automobile industry and agriculture.
"No good can come of coercive measures... These (tariffs) would not be good for Mexicans, but they would not be good for Americans either," said Lopez Obrador.
He said his government would act prudently, and a delegation led by Foreign Minister Marcelo Ebrard had already been sent to Washington for talks.
Ebrard is expected to meet US Secretary of State Mike Pompeo on Wednesday.
"We will be firm and we will defend the dignity of Mexico," Ebrard said.
A State Department spokeswoman said Ebrard and Pompeo spoke by phone on Friday, but gave few details.
"We maintain an ongoing dialogue and close cooperation with Mexico on a wide range of issues, including border security efforts," she said.
Trump, meanwhile, only stepped up his Twitter attacks.
"Mexico must take back their country from the drug lords and cartels. The Tariff is about stopping drugs as well as illegals!" he fumed.
Trump's startling announcement of the new tariffs came the same day he started the process of ratifying the new North American trade pact with Mexico and Canada, the USMCA -- an agreement that now may be under threat.
Global markets slumped over the latest trade war threat.
The top three US markets all closed down 1.3 percent or more, with some automakers skidding five percent.
Shares in Tokyo lost 1.6 percent, European markets were also hit, and the Mexican peso dropped 2.5 percent against the dollar.
House Speaker Nancy Pelosi, the powerful Democrat who has a key say in whether Congress takes up the USMCA in the coming weeks, slammed the president's move as "recklessness."
Even some senior Trump aides opposed his plan, notably Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, NBC reported, citing a source close to the White House.
Republican allies in Congress also warned Trump not to damage a vital trade relationship over border concerns.
"This is a misuse of presidential tariff authority and counter to congressional intent," said Senate Finance Committee chairman Chuck Grassley, one of several Republicans to oppose Trump's plan.
US industry groups voiced their disapproval, too, with the Business Roundtable warning Trump that unilateral imposition of tariffs "would be a grave error."
The US Chamber of Commerce said a five percent tariff on Mexican imports, which last year totaled $346.5 billion, would amount to a $17 billion hit on US consumers and businesses.
Should the tariffs tank the USMCA, "that would have serious consequences for the three countries' economies," Ana Maria Salazar, an expert on US-Mexico relations, told AFP.
Clash over migrants
Trump pledged in his 2016 election campaign to crack down on illegal immigration, but the numbers of migrants have steadily climbed.
The number apprehended at the US-Mexico border has topped 100,000 a month in recent months.
That included a new record of 58,474 people who crossed in family groups in April, and a single group of 1,036 people that particularly outraged Trump when it crossed into El Paso, Texas this week.
They are mostly people fleeing poverty and violence in Central America and ask for asylum once they reach US soil.
Trump has consistently demonized the migrants as criminals and gang members, and warned that illegal drugs are flowing across the border.
Lopez Obrador insisted his government is working to slow the flow.
"We are doing our job, without violating (migrants') human rights," said the left-wing populist, who has sought to maintain cordial relations with Trump despite the Republican billionaire's frequent anti-Mexican outbursts.
Efforts at immigration reform have stalled in Congress, and Trump has been stymied by courts on some measures his administration has attempted.
Tapping his executive powers, Trump has also taken money from the military budget to construct sections of wall along the lengthy frontier, despite his campaign pledge that Mexico would pay for the barrier.