Trump threatens tariffs on Mexico if it does not stem flow of migrants into the U.S.

In a surprise announcement that could compromise a major trade deal, U.S. President Donald Trump announced Thursday that he is slapping a fiveper centtariff on all Mexican imports to pressure the country to do more to crack down on the surge of Central American migrants trying to cross the border.

He said the percentage will gradually increase "until the Illegal Immigration problem is remedied."

The announcement comes as the administration has been pushing for passage of the Canada-United States-Mexico Agreement that would update the North American Free Trade Agreement.

Trump broke the news by tweet after telling reporters earlier Thursday that he was planning "a major statement" that would be his "biggest" so far on the border.

Trump has accused the Mexican government of failing to do enough to crack down on the surge of Central American migrants who have been flowing to the U.S in search of asylum from countries including El Salvador, Honduras and Guatemala.

But the sudden tariff threat comes at a peculiar time, given how hard the administration has been pushing for passage of the United States-Mexico-Canada Agreement that would update the North American Free Trade Agreement. It also comes less than two weeks after Trump lifted import taxes on Mexican and Canadian steel and aluminum, a move that seemed to clear an obstacle to passage of his North American trade deal.

The White House sees the deal, which was agreed to by the three nations' leaders in November, as the cornerstone of Trump's 2020 legislative agenda. But it needs approval from lawmakers in all three countries for it to be ratified.

The White House said Trump would usethe International Emergency Economic Powers Act to implement the tariff.

"If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the Tariffs will be removed," the White House said in a statement.

But if Trump is not satisfied, the fiveper centfigure will increase to 10 per centon July 1, to 15 per centon Aug. 1, to 20 per cent on Sept. 1 and to 25 per centon Oct. 1.

"Tariffs will permanently remain at the 25 per cent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory," the statement read.

Jesus Seade, the trade negotiator for Mexican President Andres Manuel Lopez Obrader, said Thursday in a news conference that if the tariffs come to pass, "we should respond in a forceful way." But he said right now that it is important to find out whether these tariffs are "really on the table."

He says if Trump is serious, the move is bad for "two countries that are trying to arrive at a marvellous free trade treaty, the best in history, according to President Trump."

Tariffs 'not linked' to trade deal: White House

On a briefing call with reporters Thursday evening, acting White House chief of staff Mick Mulvaney said there were several things Mexico could do to prevent the tariffs from kicking in.

He said the White House had specifically refrained from setting specific benchmarks but would be looking at progress "on a day-to-day and a week-to-week basis."

He also insisted that tariffs were "completely" "separate and apart from the USMCA" because one pertained to trade and the other immigration.

"The two are absolutely not linked," he claimed.

During a visit to Canada on Thursday, Vice-President Mike Pence vowed the new trade deal would be passed this year.

"Our administration is working earnestly with leaders in the Congress of the United States to approve the USMCA this summer," he said. Asked by reporters about the new tariff consideration, Pence said Mexico and the U.S. Congress need to do more and that Trump is determined to use his authority to call on them to do so.

Trump had said Thursday morning that he was planning "a major statement on the border" later Thursday or Friday that would be his "biggest statement, so far, on the border."

"This is a big-league statement. But we are going to do something very dramatic on the border, because people are coming into our country the Democrats will not give us laws," he said as he headed to a commencement speech for 2019 United States Air Force Academy graduates.