Mexico says tariffs may backfire as talks set to begin with US

[MEXICO CITY] Mexican officials will begin talks on Monday to avert President Donald Trump's proposed tariffs, arguing the move could backfire by derailing the country's efforts to stem the flow of Central American migrants to the US.

Mexico has returned tens of thousands of people fleeing Honduras, Guatemala and El Salvador this year, paying for shelter, meals, transportation and medical aid, Foreign Minister Marcelo Ebrard told reporters on Monday. More than a quarter million more migrants would reach the US this year from Central America without Mexico's help, he added.

The US threat to impose the tariffs on all Mexican goods and possibly cancel aid programmes for Central America could cause financial and economic hardship in Mexico and hurt the country's efforts to address migration flows, he said.

Mexican officials are emphasising their willingness to keep working with the US and the importance of the relationship between the two nations, echoing the tone adopted by President Andres Manuel Lopez Obrador. Mr Trump last week threatened to slap 5 per cent tariffs on all Mexican goods on June 10 that would rise to 25 per cent by October unless the country steps up its work to fight illegal immigration. The move roiled markets and opened a new front in Trump's trade wars.

Mexican Economy Minister Graciela Marquez is due to meet Commerce Secretary Wilbur Ross in Washington on Monday, and Mr Ebrard will hold a meeting with Secretary of State Mike Pompeo Wednesday.

The tariff threat could derail passage of the US-Mexico-Canada Agreement - the successor to the Nafta trade deal - just as the three nations looked set to seek ratification from their legislatures.

Republican Chuck Grassley, chairman of the Senate Finance Committee, said last week the tariffs could jeopardize the passage of USMCA, adding that trade policy and border security should remain separate issues.

BLOOMBERG