Mexico-U.S. Talks Missing the Only Guy Who Matters: Tariff Man

(Bloomberg) -- Mexico has high hopes it can negotiate a deal in a White House meeting Wednesday to placate Donald Trump before his plan to impose sweeping tariffs kicks in. The problem is, Trump won’t be there.

Instead, the Mexican delegation, led by Foreign Minister Marcelo Ebrard, will meet with Vice President Mike Pence, Secretary of State Michael Pompeo and U.S. Trade Representative Robert Lighthizer to avert tariffs that are set to begin Monday if Mexico doesn’t take unspecified actions to stem the flow of migrants and illegal drugs to the U.S.

While Ebrard will be dealing with some of the most senior and influential figures in the Trump administration, the president’s absence casts a shadow of uncertainty over the meeting. Trump has shown time and again he’s willing to overrule his advisers if he thinks they’ve gone too far, especially when it comes to tariffs and trade.

Mexican President Andres Manuel Lopez Obrador said Wednesday he is optimistic that the two sides can reach a deal. Ebrard sees an 80% chance of success. He’ll hold a news conference in Washington after the Pence-led talks.

Meanwhile, Trump -- in Europe this week to commemorate the 75th anniversary of D-Day -- tweeted Wednesday that his tariff threat was “no bluff.”

“Mexico can stop it,” Trump said of migration and drug smuggling during a meeting with Irish Prime Minister Leo Varadkar. “Otherwise we won’t be able to do business; it’s a very simple thing. I think they want to make a deal and they sent their top people to try to do it.”

Vague Demands

More than 144,000 people were apprehended after illegally crossing the southern border in May or were refused entry to the U.S., Customs and Border Protection announced on Wednesday. That’s the most in a single month in at least five years; the number has grown every month since January. Most of the apprehensions are families or children traveling alone, pressuring a U.S. immigration system that has struggled to humanely detain and care for them.

Many of the migrants are people from Central American countries fleeing violence and poverty and seeking asylum in the U.S.

The White House has so far been vague about what Trump, the self-avowed “Tariff Man,” expects Mexico to do to avoid the duties. But White House trade adviser Peter Navarro offered what appeared to be an opening salvo in negotiations earlier Wednesday, saying tariffs may not have to take effect if Mexico could meet three conditions, including keeping U.S. asylum seekers in that country.

“The most important thing is for the Mexican government to take the asylum seekers,” Navarro said in an interview on Bloomberg TV in Washington. The Mexican government could also boost security along its southern border with Guatemala, as well as crack down with more checkpoints and other measures on buses and trains that ferry migrants, he said.

“We believe that today will be a good day for America and Mexico,” Navarro said.

Trump has threatened to impose a 5 percent tariff on all Mexican imports, and raise it monthly to as high as 25 percent by October, unless Mexico takes action to slow migration through its country and into the U.S.

Senate Republicans who have made clear to the White House they oppose Trump’s use of tariffs also hope for a deal.

Senate Finance Chairman Chuck Grassley, an Iowa Republican whose panel is in charge of trade, said he had a “good feeling about progress being made” with Mexico. Asked whether a deal could be reached while Trump is in Europe, he said: “Listen, you never know until you ask the president.”

Pence has previously failed to thread the needle when acting as the president’s surrogate in important negotiations. The vice president led talks with congressional Democrats earlier this year to end a government shutdown, only for Trump to tweet later that there was “not much headway made.” The government remained shuttered until Trump relented on his demand that Congress provide more money to build a border wall.

Republican Opposition

Republican lawmakers have warned against the Mexico tariffs and are pushing for a deal. The tariffs also further jeopardize Trump’s update of Nafta, a key accomplishment of his first term. The new trade pact, called the U.S.-Canada-Mexico agreement, was already at risk of stalling in Congress.

There are ways Congress could override Trump’s legal authority for his Mexico move, but not before the duties take effect on Monday. Lawmakers could pass a resolution of disapproval against Trump’s declaration that there’s an emergency on the southern border, but Congress would need roughly 20 Republican senators and 55 Republican representatives to override a presidential veto.

House Minority Leader Kevin McCarthy said Wednesday that fellow Republicans need to stop speaking out against the tariffs, in order to prevent them.

“At the end of the day, we should support the president so we can get an agreement so we don’t have tariffs,” he said in an interview. “Them talking about not supporting him undercuts his ability to do that.”

House Speaker Nancy Pelosi said Wednesday that the House’s options are unclear since they don’t yet have details of the Mexico tariffs. She said the Senate “probably” has the votes to override a veto, that tariffs on a friendly ally are “dangerous territory,” and suggested McCarthy’s allegiance to the president may not be shared by all lawmakers. “Let’s see what his members do,” she said.

--With assistance from Kim Chipman.

To contact the reporters on this story: Josh Wingrove in Washington at jwingrove4@bloomberg.net;Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Joshua Gallu

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