John Negroponte: Trump's new tariff on Mexico is 'bad politically and bad economically' - CNBC

A widely followed former American diplomat questioned on Friday whether President Donald Trump was adopting the right strategy by threatening Mexico with a new tariff because of immigration issues.

Trump announced Thursday that his country plans to impose a 5% tariff on all Mexican imports from June 10. In a statement, he attributed that unexpected move to a "border crisis" that has resulted in America being "invaded by hundreds of thousands of people." He even suggested that he could raise the tariff on Mexico's goods to 25% by Oct. 1 this year if the country did not sufficiently halt the flow of migrants into the U.S.

Speaking with CNBC's "Street Signs" on Thursday evening U.S. time, John Negroponte questioned whether Trump's move would have the desired effect.

"I think it's both bad politically and bad economically and I don't think it's really going to help solve the immigration problem, either, which is what Mr. Trump said he's trying to attack," said Negroponte, current vice chairman of consultancy McLarty Associates and formerly U.S. ambassador to Honduras, Mexico, the Philippines, the United Nations, and Iraq.

Mexico, for its part, has said it would not respond well to economic threats.

In a letter addressed to Trump, Mexican President Andrés Manuel López Obrador said he did not want confrontation, and that leaders have a responsibility to seek peaceful solutions to controversies.

John Negroponte on July 17, 2018 in Bogota, Colombia.

Gabriel Aponte | Getty Images

"President Trump: Social problems cannot be resolved with taxes or coercive measures," the Mexican leader wrote.

Negroponte told CNBC he agreed with that sentiment. Still, he said, perhaps now is the time that Washington and Mexico City can come together on the issue.

In fact, in his letter to Trump, López Obrador requested that U.S. and Mexican officials begin meeting on Friday to discuss how to "reach an agreement for the benefit of both nations."

Even from a domestic politics standpoint, Trump may have overplayed his hand with the new tariff threat.

U.S. Senate Finance Committee Chairman Chuck Grassley, a Republican who represents Iowa, slammed the move. He called it a "misuse of presidential tariff authority."

"Trade policy and border security are separate issues," Grassley said in a statement following the Trump's announcement. "Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump's and what could be a big victory for the country," he warned.

The USMCA refers to the new trade agreement between the U.S., Mexico and Canada, which lawmakers had yet to approve. Several experts suggested that the deal, an updated version of the North American Free Trade Agreement, could now face real difficulties getting passed.

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