Economics: Mexico enters the tariff fray with duties

MEXICO - Report 11 Jun 2018 by Mauricio Gonzalez and Esteban Manteca

Not long after the European Union and Canada detailed the import taxes they were imposing on US goods in response to the steel and aluminum tariffs the Trump administration had activated, Mexico followed suit with its own list of US products on which it would impose retaliatory import duties. Labeling as patently false White House claims that Mexican steel and aluminum exports pose a threat to US national security, and signaling that US actions violate World Trade Organization safeguards, Mexico said soon it will file WTO dispute settlement claims such as those Canada and the European Union began registering over a week ago.

The list of US products subject to the new tariffs Mexico published June 5 was highly reminiscent of the one it unveiled in March 2009 after Washington balked at implementing a pilot program designed to test initial implementation of an agreement reached in the original Nafta treaty to eventually allow Mexican truckers to make cross-border deliveries deep within US territory.

According to information from the new economy ministry, the compensatory measures adopted by Mexico are equivalent to the effect of the US steel and aluminum tariffs and will be worth between 4 and 5 billion dollars annually. And the economy minister stated openly that domestic US political considerations enter into its calculations as the new duties involve “products with implications in diverse [US] districts with important [House] representatives and senators…” He added that the products were chosen only after determining they would not affect domestic consumption or inflation, and that alternative supply sources were available.

Although a wide range of agricultural and manufactured goods are included, Mexico’s response is designed to temporarily harmonize duties on a range of steel and related products at a tariff level similar to those employed by other countries and which Mexico defined last year in an effort to protect its steel industry from disloyal imports from third countries (such as China), while also striving to achieve consistency throughout supply chains, and maintain competitiveness in the most sensitive industrial sectors.

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