Wednesday, June 12, 2024

Did Mexico get Trumped over threatened U.S. tariffs?

by BIZ Magazine

A crisis of another kind was averted at the U.S./Mexico border when the Trump administration announced Saturday they had successfully negotiated a compromise with the Mexican Government to provide more help to slow immigrant defections across the U.S. border.

The Trump Administration said it would impose five percent tariffs on all Mexican imports starting June 10, unless Mexico provided more support to stem the flow of undocumented migrants to the

U.S. The tariffs would have escalated by five percentage points each month, reaching 25% percent by October. Last week the President said, “The Tariff will gradually increase until the illegal immigration problem is remedied, at which time the Tariff will be removed.”

The permanency of the new agreement is unclear, especially if Mexico doesn’t “live up” to their side of the negotiated agreement. Several transportation and logistics problems were developing because of the situation, which will take a few days to work themselves out.

Importers started moving goods more quickly into the U.S. from Mexico to get ahead of the threatened tariffs, increasing traffic and surge at border crossings already marked by heavy congestion. Shippers right now are looking for capacity and speed, noting true supply chain disruption.

“As the President continues to levy surprise tariff increases with little notice, shippers and consignees alike are scrambling for effective supply chain adjustments. The tariffs go beyond simple economics impacting production, inventory management, transportation and real estate assets”, says AFS Logistics’ VP of International, Sheila Hewitt. “They directly impact the direct life cycle of a product, and could put the USMCA ratification at risk impacting our trade with Canada, if they are threatened again.”

If tariffs with Mexico are again threatened or implemented, several trucking industry executives say their primary concern is over the long term if tariffs continue to rise and manufacturers shift production or seek new suppliers to minimize the impact of the levies.

Over the long term, manufacturers may even move production away from Mexico.

“We are seeing supply chain disruptions and contingency planning taking place across many businesses”, AFS Logistics’ Chief Commercial Officer Scott Boyer states, “and we are working with our customers to offer innovative solutions by providing consulting services and engineered product solutions to meet this rapidly changing dynamic. Our customers expect us to be a trusted advisor and problem solver, and we are doing that by continuing to expand our technology development, product/service launches and assimilating top industry talent into our organization.”

U.S. goods trade with Mexico has remained robust despite tensions between the two countries and during negotiations for the now – completed American Free Trade Agreement between the U.S., Mexico, and Canada.

Privately owned and operated, AFS Logistics, founded in 1982, has provided spend management for all modes of transportation from mid-size companies to Fortune 100. AFS services include Managed Transportation Services, Multi-Modal Freight Audit and Payment, Advanced Analytics, LTL, Parcel & Truckload, Consulting and Network Optimization, and International Freight Forwarding & Custom House Brokerage Solutions. AFS deploys its services with offices in Shreveport; Atlanta, GAa.; Dallas, Texas; Greenville, SC; Tulsa, Ok.; Kansas City, Ks.; and Salt Lake City, Utah.

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