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Head of manufacturers group calls Mexico tariffs 'a Molotov cocktail'

The head of a U.S. manufacturers association says President Donald Trump’s proposed tariffs on Mexico would have "devastating consequences" on the industry and calls the move a "Molotov cocktail of policy.”

Trump is threatening to impose tariffs to force Mexico to stop people from illegally crossing the U.S. border. Tariffs would start at 5% on all goods from Mexico on June 10 and gradually ramp up to 25%.

Trump tweeted that Mexico could "stop the flow of people and drugs" across the border "if they want.”

Mexican officials meeting in Washington, D.C., this week with U.S. officials insisted Monday that they are acting to stem the flow of migrants, many of whom are seeking asylum in the U.S.

“When you conflate immigration, tariffs and trade, you really do create this recipe, frankly, for a disaster when it comes to U.S. manufacturers,” Jay Timmons, president and CEO of the National Association of Manufacturers, said on Yahoo Finance’s “The First Trade.”

Last week both the National Association of Manufacturers and the American Automotive Policy Council came out strongly against the threat of tariffs.

The tariffs appear to be harming Trump’s base, farmers and working-class Americans in manufacturing jobs, the most. Those are the same people who helped push him to victory in the 2016 election.

According to an analysis by Deutsche Bank, 8 of the 10 states most adversely affected by the current China tariffs voted for Trump in 2016. Just Washington and Oregon did not.

Double-whammy for companies

The U.S.-China trade fight has already forced many companies to shift their manufacturing to Mexico to avoid tariffs and hold prices steady. But with the new proposed Mexico tariffs, companies may soon start running out of options to manufacture affordable products.

So far, Mexico has been a beneficiary of the China trade war. For the first time, Mexico edged out both China and Canada this year to become the top trading partner of the U.S., according to Census Bureau data.

Now, Mexico’s relationship with the U.S. is strained and Timmons fears the pending tariffs will jeopardize the renegotiated NAFTA, called USMCA, between the U.S., Canada and Mexico.

He says the U.S. needs the agreement to protect intellectual property and jobs. “Two million manufacturing jobs are dependent on our trade relationships in North America,” says Timmons, “and this [the tariffs] is just not the way to tackle the immigration problems.”

Instead, Timmons says it’s an issue for lawmakers to hash out.

“Congress should be able to act on immigration,” he says. “We should not have these trade issues intertwined.”

Alexis Christoforous is co-anchor of Yahoo Finance’s “The First Trade.” Follow her on Twitter @AlexisTVNews.

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