Trumps 200% Tariff Threat Would Violate USMCA Act

Republican presidential nominee and former president Donald Trump made headlines this week during a policy roundtable in Smithton, Pa.

During the roundtable, Trump brought up Deere’s announcement earlier this year that it would be moving some production to Mexico by 2026.

He said, quote, “I’m just notifying John Deere right now: If you do that, we’re putting a 200% tariff on everything that you want to sell into the United States.” 

There’s one major roadblock to that threat, however — the United States-Mexico-Canada Agreement, signed by Trump when he was president in January 2020, which replaced the North American Free Trade Agreement. USMCA prohibits the leverage of tariffs on a range of goods, allowing companies to manufacture in Mexico and Canada and export back to the U.S. without high costs.

When the USMCA was signed 4 years ago, it was reported that nearly 30% of all equipment produced in the U.S. is intended for export and Canada and Mexico are the first and second-largest export markets for both U.S. construction and agricultural equipment. Since the creation of NAFTA two decades ago, the equipment manufacturing industry has benefited greatly from duty-free access to our industry’s largest two export markets, Canada and Mexico.

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