Guatemalans are reacting with alarm to the Trump administration’s threats to retaliate if the country does not sign a far-reaching migration agreement, saying the penalties could cripple the economy, deepen a political crisis and send more people fleeing to the United States.

Trump warned on Tuesday that he might slap tariffs on Guatemala’s exports or tax the billions of dollars in remittances its migrants send home to the Central American country. He was reacting to President Jimmy Morales’ decision to cancel a trip he was to make to Washington last week during which he was expected to sign a safe-third-country agreement.

Such an accord would direct many U.S.-bound migrants passing through Guatemala to seek asylum there rather than in the United States.

The Trump administration has said the pact would prevent thousands of migrants from reaching the southern U.S. border. But Guatemalan politicians, analysts and former officials have warned that the country — one of the poorest in the Western Hemisphere — could not handle a deluge of asylum seekers. 

On Wednesday, Guatemalans were faced with another potential crisis: U.S. penalties that could pummel their struggling economy.

“This would be a total disaster,” said Juan Carlos Tefel, the president of the country’s main business association.

Tefel, who heads the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations, said Trump’s retaliatory measures would have a more devastating impact on Guatemala than the migration agreement.

Jordán Rodas, Guatemala’s human rights prosecutor, said U.S. penalties “could destabilize the country” by driving poverty rates higher. They could also prompt more Guatemalans to head for the United States as they lose jobs or income, he said. The country is already the largest source of migrants apprehended on the border in the U.S. Southwest.

Morales called off his Washington trip after several current and former officials asked Guatemala’s constitutional court to block the president from signing the migration deal. The court ruled on July 14 — the day before Morales’s scheduled meeting with Trump — that the pact required the approval of the Guatemalan Congress. 

It is unclear whether Morales could muster a majority of votes in the 158-member Congress to pass the deal. The agreement, largely hammered out in secret, has been condemned by several politicians.

But CACIF, the politically influential business group, joined the president in criticizing the court’s decision. In Congress, meanwhile, lawmakers said they would seek to punish several judges on the court for their ruling, alleging that they had abused their authority and violated the constitution.

Adding to the pressure, a senior U.S. official warned that the U.S. government could impose sanctions — including denying American visas — on Guatemalan lawmakers who voted against the migration agreement. 

“There will be measures that we can take, especially against those in the Guatemalan Congress who are seeking to prevent a solution,” Mauricio Claver-Carone, who handles Latin America issues on the National Security Council, told the Spanish news agency EFE.

Human rights activists said the attacks on the court were adding to a deepening institutional crisis.

“You’ve seen repeatedly the Guatemalan government making decisions that go against the rule of law,” said Adriana Beltrán, a Central America specialist at the Washington Office on Latin America. “And it’s been the court that has defended the constitution.”

Morales has argued that he has the right, as president, to make foreign policy decisions. Luis Hernández Azmitia, a congressman from the Reform Movement party, which often supports the conservative president, agreed.

“Diplomacy is in the hands of the president,” he said. 

Many other lawmakers disagreed.

“We are not in support of the president making an agreement like this,” said Sandra Morán Reyes, from the Convergence party. “This country isn’t able to support asylum seekers here.”

Guatemala is highly vulnerable to U.S. penalties on its economy or workers. Remittances sent home by Guatemalans abroad make up nearly 13 percent of the country’s GDP — or over $10 billion this year. Most of it comes from the United States.

Guatemala ships nearly 40 percent of its exports to the United States, its No. 1 trading partner.

Tefel said officials at the U.S. Embassy in Guatemala warned him after the deal fell apart that “this administration isn’t afraid of using a stick.”

Few details have been released on how Guatemala would handle thousands of potential asylum applicants.

Between January and November 2018, Guatemala received more than 262 asylum applications, according to the U.N. High Commissioner for Refugees. Migration analysts say only a small fraction of those applications were approved.

“Guatemala doesn’t have migrant shelters, institutions that can process asylum claims or distribute work permits to those who are seeking refuge,” said Pedro Pablo Solares, a columnist for several Guatemalan newspapers.

Sheridan and Sieff reported from Mexico City. Gabriela Martínez contributed to this report.