Trump's Mexico tariffs could be 'extremely problematic' for the revamped NAFTA, trade official says

Key Points
  • Mexico won't retaliate against President Donald Trump's tariffs until the threat seems more serious, a trade official tells CNBC.
  • The threatened tariffs could also mean trouble for a revamped North American trade deal, says Guillermo Malpica, the head of Mexico's Trade & NAFTA Office.
  • "This could be extremely problematic for USMCA if the tariff goes into effect," he says.
Head of Mexico's trade office talks tariffs, USMCA

President Donald Trump's threatened tariffs on Mexican imports could mean trouble for a revamped North American trade deal, Mexican trade official Guillermo Malpica told CNBC on Friday.

"This could be extremely problematic for USMCA if the tariff goes into effect," Malpica said, referring to the pact, which is known as the United States Mexico Canada Agreement. "Mexico still has to ratify this deal, too."

The legislatures of all three countries must approve the deal, which was struck by Trump and his counterparts in Canada and Mexico. The deal, an enhancement of the existing North American Free Trade Agreement, was already running into bipartisan resistance in the U.S. Congress.

Malpica, however, cautioned that Mexico won't retaliate against Trump's tariffs until the threat seems more serious.

Trump's announcement late Thursday of a 5% tariff on goods from Mexico is "so far only an announcement," said Malpica, head of the Trade & NAFTA Office. "We have to wait and see what the complete notification procedure from the U.S. to Mexico [is], and then assess how that would impact our commitments with the U.S."

Trump said late Thursday the tariffs on Mexico would be implemented beginning June 10. The Trump administration says it hopes the duties will force Mexico to curb illegal immigration — though Trump cited manufacturing jobs and trade deficits as motivation for the tariffs in Friday tweets. The White House said the duties would gradually rise to 25% by October 2019.

Malpica said it "is not a good idea to mix immigration and trade. ... We will continue our dialog with the United States on two separate tracks. Immigration and trade will be separate."

The move came as the U.S. and China attempt to strike a trade deal. The world's two largest economies increased tariffs on one another this month, with the U.S. making the first move by increasing duties on $200 billion worth of Chinese products from 10% to 25%. China announced plans to raise tariff rates on $60 billion in U.S. goods.

The Mexico tariffs may further undermine the chance of a trade resolution with China.

Malpica, speaking in an interview on CNBC's "Closing Bell," said Mexico officials were "disappointed" with the White House's announcement but that it didn't necessarily affect ongoing trade discussions. Mexico has also had "initial discussions" with trading partner Canada, Malpica said. "For them, it's also important to have a ratification soon."

"We try to separate the public discourse from the technical discussions [and] serious engagement among our parties," he added.

"Legally we are approaching this through the lens of NAFTA and [the World Trade Organization], and while we hope for a conciliatory resolution, there are going to be consequences under our legal trade rights," Malpica said. "According to the rules of international trade, we have the right [to] impose countermeasures."

— CNBC's Lori Ann LaRocco contributed to this story.