Mexico Hits Back at US with Trade Tariffs

  • 6/6/2018
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Mexico put tariffs on American products ranging from steel to pork and bourbon on Tuesday, retaliating against the Trump administration’s levies on steel and aluminum. The announcement of tariffs ranging from 15 percent to 25 percent came as the future of the Nafta trade agreement came under fresh attack from the White House. Mexico’s response further raises trade tensions between the two countries and adds a new complication to efforts to renegotiate the trillion-dollar North American Free Trade Agreement between Canada, the United States and Mexico. American pork producers, for whom Mexico is the largest export market, were dismayed by the move. Trump last week rattled some of the United States’ closest allies by removing an exemption to tariffs on imported steel and aluminum that his administration had granted to Mexico, Canada and the European Union. Meanwhile, Trump economic advisor Larry Kudlow revived the possibility on Tuesday that the president will seek to replace NAFTA with bilateral deals with Canada and Mexico, something both countries say they oppose. Following news of the new Mexican tariffs, which take effect immediately, the peso tumbled to its weakest level since February 2017, making it one of the worst performers among major currencies. Mexico’s retaliatory list, published in the government’s official gazette, included a 20 percent tariff on US pork legs and shoulders, apples and potatoes and 20 to 25 percent duties on types of cheeses and bourbon. A net importer of US steel, Mexico is also putting 25 percent duties on a range of American steel products. Mexico’s trade negotiators designed the list, in part, to include products exported by top Republican leaders’ states, including Indiana, where Vice President Mike Pence was formerly governor, according to a trade source familiar with the matter. Bourbon-producing Kentucky is the home state of Senate Majority Leader Mitch McConnell, a Republican. The new tariffs could also have political implications in some hotly contested races as the Republicans seek to maintain control of both chambers in Congress in November’s election, illustrating the potential perils of Trump’s aggressive efforts to set right what he sees as unfair trade balances with allies and rivals. Mexico announced its response to Trump’s move last week but it did not provide details of tariff levels or a full list of products at the time. The United States and Mexico do $600 billion in annual trade and about 16 percent of US goods exports go to its southern neighbor. However, the Mexican economy relies more on trade than does the US economy, with about 80 percent of its exports sold to America. The trade fights with Mexico and Canada are part of the Trump administration’s “America First” economic agenda, which has also put Washington on a collision course with China over trade. Washington and Beijing have threatened tit-for-tat tariffs on goods worth up to $150 billion each, as Trump has pushed Beijing to open its economy further and address the United States’ large trade deficit with China. The United States imposed tariffs of 25 percent on imported steel and 10 percent on aluminum in March, citing national security grounds. Last week Washington said it was ending a two-month exemption it had granted to imports from Canada, Mexico and the European Union. The dispute with Mexico over tariffs makes it more difficult to conclude talks on renegotiating NAFTA between the three countries, discussions that began last year because Trump said the deal needed to be reworked to better serve the United States. Canada has also strongly objected to the metals tariffs. The US side has linked lifting its tariffs to a successful outcome of the NAFTA negotiations. White House spokeswoman Sarah Sanders said Trump was still looking at the possibility of doing individual trade deals with Canada and Mexico in place of NAFTA. “He’s looking at the best way to make sure he gets the best deal possible for American workers and whether or not that’s through NAFTA or other means, those options are on the table,” Sanders told a news briefing.

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