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Surprise Mexican tariffs hurt China agreement chances: ‘How can you trust Trump to honor a deal?’

Us-China Trade

President Donald Trump’s surprise vow to slap new tariffs on Mexican goods has an unintended consequence: It further undermines the chance of a trade resolution with China.

The U.S. is set to impose a 5% tariff on all Mexican imports from June 10, Trump first announced in a Twitter post Thursday night. The move came as a shock as the White House just took a formal step to kickstart approval of the United States Mexico Canada Agreement.

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Trump’s 180-degree turn on one of U.S.′ largest trading partners is sending a ominous message to the international community that he can’t be trusted, Wall Street policy analysts said, adding that China, already skeptical of Trump’s reliability, is now less likely to sign a trade deal with him.

We view this action as further deteriorating the U.S.-China trade fight. Chinese officials have stated their concern about the reliability of President Trump as a trading partner. These tariffs were announced the same day as significant advancement of the USMCA. If China does not believe a deal will stick, why negotiate?

said Ed Mills, public policy analyst at Raymond James, in a note.

Chinese leader Xi Jinping and Trump are set to meet at the G20 summit in Japan next month, but the Mexican tariffs put into further doubt that a “substantive” meeting is possible, Mills added.

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