US President Donald Trump's threat of 5% tariffs on goods from Mexico over illegal immigration could upend a major trade deal that took over a year of bitter negotiations to reach.

The US, Canada, and Mexico agreed to the US-Mexico-Canada Agreement last year, but Sen. Chuck Grassley of Iowa warned that the new tariffs "would seriously jeopardize passage" of the agreement.

The president of the National Foreign Trade Council also said the tariffs would "essentially blow up" the agreement.

The new deal still needs to be ratified by all three governments, and the White House had just begun to speed up the process as tensions cooled among the countries after Trump agreed to drop other tariffs.

Trump said the new tariffs would increase "until the Illegal Immigration problem is remedied," while Mexico's president said that an "America First" policy was a "fallacy" and that Mexico was already doing "as much as possible."

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US President Donald Trump's newly threatened tariffs on Mexican goods could derail a trade agreement that took more than a year of intense and often bitter negotiations, and they have drawn backlash from both Mexico and at least one of Trump's Republican allies.

The US, Canada, and Mexico agreed to the US-Mexico-Canada Agreement last year as an update to the North American Free Trade Agreement.

Trump first signaled that he wanted to negotiate NAFTA in January 2017, but tense negotiations, threats of tariffs, and the danger that the US would pull out of the process entirely meant the three governments did not sign the agreement until this past November.

The sweeping trade deal would create changes for employees across the dairy and auto industries and affect labor unions and large corporations.

But Trump's surprise announcement that he plans to put tariffs of 5% on all US imports from Mexico, a number that could increase to as high as 25%, may threaten the agreement just as the White House was seeking to hasten its approval by Congress and Mexico started to ratify it.

Read more: Trump says he'll slap 5% tariffs on all Mexican goods to 'STOP' influx of migrants at the US-Mexico border

Sen. Chuck Grassley, a Republican who serves as the chairman of the Senate Finance Committee and is typically a Trump ally, called Trump's announcement a "misuse" of presidential authority and said the move could derail the USMCA, which has been ceremonially signed by the leaders of the three countries but still needs to be ratified by the three governments.

Sen. Chuck Grassley of Iowa. Thomson Reuters

He said the new tariffs, intended to force Mexico to stem illegal immigration into the US, "would seriously jeopardize passage of USMCA."

"I support nearly every one of President Trump's immigration policies, but this is not one of them," he said in a statement.

Rufus Yerxa, the president of the National Foreign Trade Council, said the tariffs would "essentially blow up USMCA," The Washington Post reported.

The implementation of the new agreement still requires congressional approval in the US, but Democrats have not signaled full support for the deal, with House Speaker Nancy Pelosi signaling concern with how it would be enforced and saying the Trump administration is moving forward too quickly.

Republicans have expressed concern that the deal doesn't have enough support to get through Congress.

Read more: A report on Trump's NAFTA overhaul found that it's not going to do much for the economy

Trump said the 5% tariffs would take effect June 10.

Peña Nieto, Trump, and Trudeau at the ceremonial signing of the USMCA free-trade agreement. Reuters

Trump previously threatened tariffs of up to 25% on Mexican goods in April, saying he would do so "if for any reason Mexico stops apprehending and bringing the illegals back to where they came from."

He then said: "This will supersede USMCA."

Trump had signaled a warmer treatment of Mexico in April, agreeing to lift tariffs on metal imports from Mexico and Canada after a yearlong standoff, leading the other two countries to lift their retaliatory tariffs and soothing tensions on the continent.

Canadian Prime Minister Justin Trudeau said at the time that the agreement was a "huge step forward."

That decision was aimed at speeding up the passage of the USMCA at Congress.

But Mexico's response to Trump's new tariff announcement signaled new tensions, with President Andrés Manuel López Obrador writing in a letter that Trump's "America First" policy was a "fallacy" and that issues like immigration could not be fixed with tariffs.

"'America First' is a fallacy because until the end of times, even beyond national borders, justice and universal fraternity will prevail," he said.

He said "social issues are not resolved through taxes or coercive means."

Mexican President Andrés Manuel López Obrador. Reuters/Edgard Garrido

He added that Mexico's foreign minister would visit Washington on Friday in a bid to resolve the issue.

Trump said on Twitter that the tariffs "will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed."

He said he was announcing them in light of the number of migrants crossing into the US from Mexico.

He warned that "if Mexico fails to act, tariffs will remain at a high level."

In his letter, Obrador said Mexico was doing "as much as possible" to curb the number of migrants crossing through Mexico and into the US from Central America "without violating human rights."