Trump holds firm on Mexico tariffs despite Republican dissent

President overrules top economic advisers

By Jeremy Diamond, Kevin Liptak and Kaitlan Collins, CNN

(CNN) - President Donald Trump overruled three of his top advisers in deciding to move ahead with his tariff threat against Mexico over immigration. And as he faced a stock market slide and opprobrium from key Republican senators on Friday, the President held firm, tweeting: "It's time!"

Trump's drastic tariff threat sent shockwaves through Washington, sparking concerns inside the White House and on Capitol Hill that a new trade offensive would scuttle efforts to ratify a replacement for the North American Free Trade Agreement -- and drag down the US economy, which relies heavily on Mexican-produced cars, machines and foodstuffs, just as the 2020 campaign is taking off.

But incensed by a spike in migrants crossing illegally into the US this week, the President ignored warnings from White House senior adviser Jared Kushner, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin with his decision to move ahead Thursday with a vow to impose import duties on all goods from Mexico until steps are taken to curb the flow of migrants.

An administration official familiar with the matter confirmed to CNN that Kushner called in from abroad to urge the President not to impose the tariffs. Kushner worked with Lighthizer to negotiate that deal and was awarded Mexico's Order of the Aztec, the country's highest honor for a foreigner, for his work. Kushner subsequently called Mexico's foreign minister to discuss the situation. The Washington Post first reported Kushner's opposition.

Lighthizer, who has been working to build support for the US-Mexico-Canada Agreement in Congress, warned Trump the move would hamper ratification of the trade deal, while Mnuchin warned Trump the move would roil the stock market, multiple sources told CNN. Like Lighthizer, Kushner argued that the tariffs could undermine the administration's efforts to ratify the USMCA trade deal, the source said.

And when the announcement came down Thursday, Vice President Mike Pence was on Air Force Two, returning from a trip to Canada to assure the prime minister the administration was all-in on the trade deal.

Among the sticking points on the new Mexico tariffs was the when they should be imposed, according to a senior White House official.

Some White House officials wanted the deadline to be more imminent, while others argued Mexico should be given more time to stem the flow of undocumented immigrants.

Ultimately, the June 10 date was settled on.

The deliberations pitted Lighthizer and Mnuchin against a trio of influential presidential advisers: senior policy adviser Stephen Miller, trade adviser Peter Navarro and acting chief of staff Mick Mulvaney, who all supported Trump's tariff gambit, the sources said.

In a CNBC interview Friday morning, Navarro -- who told Trump the move would get Mexico's attention -- hailed the tariffs as "brilliant" while a graphic showed the stock market falling.

But the rebuke from key lawmakers in the President's own party made clear that concerns about the fate of the USMCA in the wake of Trump's move were not unfounded.

In a blistering statement, Republican Sen. Chuck Grassley, the chairman of the Senate Finance committee, called Trump's move a "misuse of presidential tariff authority" and warned that following through "would seriously jeopardize passage of USMCA."

The concerns were echoed inside the White House.

"It's shooting ourselves in the foot," one White House official said.

House Democrats have been slowly warming to the new trade agreement and some administration officials believed the deal could win passage by the end of the summer. Now, the tariff threat is complicating the administration's already fraught efforts to get the USMCA approved, with several administration officials now casting doubt on the prospects of near-term ratification.

And Trump's tariff threat landed in Mexico City without warning, the same day the Mexican President Andres Manuel Lopez Obrador sent the USMCA to the Mexican Senate for approval. As of Friday morning, Trump and Lopez Obrador still had not spoken directly, but the Mexican foreign minister said he'd received phone calls from Kushner and secretary of state Mike Pompeo, and would be in Washington next week for meetings.

Mulvaney, the White House chief of staff, dismissed the notion that Trump's move would imperil passage of the USMCA.

"The two are absolutely not linked," Mulvaney said. "These are not tariffs as part of a trade dispute. These are tariffs as part of an immigration problem."

Even as the White House worked to assess the fallout of Trump's move on Friday, some officials signaled that Trump could ultimately hold off on imposing the tariffs.

A senior administration official said that while Trump is "very sincere" about his threat, there is still a "path" to Trump holding off on imposing them.

"The path to not putting them on is if Mexico puts in effort to reduce illegal immigration at the border," the official said, noting that what that path entails was "intentionally" left ambiguous, giving the President a "wide berth" of actions from Mexico he could consider satisfactory.

But, the official said: "I don't think we know" whether Trump will ultimately impose the tariffs.

Part of that uncertainty was driven by the rushed rollout of the policy, which would impose a 5% tariff on imports from Mexico on June 10, increasing to 15%, 20% and 25% if Mexico does not act on Trump's demands by August, September and October, respectively.

During a call Wednesday morning to discuss Trump's decision to move forward with his tariff threat, White House officials deliberated on when to announce the policy. Rather than a smoother, more calculated rollout, the officials decided to speed up the timeline to a Thursday evening release to keep any more details from leaking to reporters.

The rollout has been less than smooth, with the President earning an earful from key Republican senators who expressed alarm at the decision on Thursday and Friday, with some urging Trump to reconsider.

"I support nearly every one of President Trump's immigration policies, but this is not one of them," Grassley, the chairman of the Senate Finance Committee, said. "I urge the president to consider other options."

Fellow Iowa Republican Sen. Joni Ernst also urged Trump to "reconsider," arguing the "livelihoods of Iowa farmers and producers are at stake" as well as passage of the revamped North American trade deal.

Senate Majority Leader Mitch McConnell, meanwhile, highlighted the "vital" nature of the US-Mexico trade relationship and stressed that "any proposal that impacts this relationship deserves serious examination."

While the White House briefed some Republican lawmakers on the President's tariff plans, the move landed with a thud, leaving top Republicans scratching their heads.

But White House press secretary Sarah Sanders rejected the notion that Republicans were blindsided by the move.

"The President didn't blindside his own party. If Republicans weren't aware, then they haven't been paying attention," Sanders said on Friday. "Anybody int his country or frankly in the world that says that there surprised by this has been living under a rock and not paying attention. The President's been crystal clear that we have to take action, we have to step up, we have to do more, and we have to secure our borders."

CNN's Pamela Brown contributed to this report.

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