Trump hits Mexico with trade tariff which rises until illegal immigration ends

By Rachael Kennedy, news reporter

Donald Trump has said he will place a tariff on all imported goods from Mexico until the neighbouring nation to the US does more to combat illegal immigration.

In a tweet, the US president said a 5% tariff on Mexican imports to the US would come into effect on 10 June, and would "gradually increase" until "the illegal immigration problem is remedied".

A White House statement explained the tariffs would rise to 10% on 1 July if Mexico did not take "effective actions" to curb illegal immigration, and would reach a height of 25% by October.

The statement added: "Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory."

Mr Trump said he would enact the Emergency Economic Powers Act in order to put the tariffs in place.

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But many experts have noted that the president's sudden move against Mexico – one of America's biggest trading partners – could derail approval of the United States-Mexico-Canada Agreement (USMCA), a revision of the North American Free Trade Agreement (NAFTA).

Senate finance committee chairman Chuck Grassley said the tariffs were a "misuse" of presidential authority, stressing that "trade policy and border security are separate issues".

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He added: "I support nearly every one of President Trump's immigration policies, but this is not one of them."

The markets also responded to Mr Trump's threat, with US stock index futures dropping around 0.7% on Thursday evening, and the Mexican peso weakening by more than 2%.