Mexico Retaliates Against US Steel Tariffs

By: DailyForex.com

If the US president imagined that exporting nations would meekly accept the imposition of tariffs on their steel and aluminium products entering the American market, he badly miscalculated.

Mexico exports steel to the USA, but is actually a net importer of US steel. Mexico is the major market for US pork exports. Bilateral trade is worth $600 billion a year and approximately 16% of US output is consumed in Mexico; in the other direction, Mexico’s exports to the USA account for 80% of its export trade.

Mexico has responded to the imposition of US tariffs on aluminium and steel with tariffs on imports of US products including whiskey, cheese, bourbon steel apples, potatoes and pork. The targeted response is said to have been designed to hurt Republican held regions ahead of this year’s mid-term elections. It means that American producers of these products will face a financial barrier (20 to 25%) against non-American competitors seeking to penetrate into the Mexican market. This point has not been lost on America’s politicians:

"We need trade and one of the things we're concerned about is long-term implications that these trade issues will have on our partnerships with Mexico and Canada and other markets. If our customers around the world start going to other parts of the world for their supplies, that is a serious problem," noted Mike Naig (Rep), Iowa’s Secretary of Agriculture (Reuters).

Iowa is the leading US pork-producing state, so any loss of business with Mexico could hurt sitting Congressman, Rod Blum (Rep) in the mid-term elections.

The Trump White House is said to favour bilateral trade agreements with Mexico and Canada rather than continue with current NAFTA agreements, neither of the US’s partners are keen on this move which could be described as a “divide and conquer” approach.

Naturally, other nations are also planning to react against American tariffs with their own, targeted, similar measures. It is likely, for instance, that European steel makers hurt by US tariffs may look to make up the shortfall in sales by finding new markets in, oh, I don’t know, say Mexico…

Dr. Mike Campbell is a British scientist and freelance writer. Mike got his doctorate in Ghent, Belgium and has worked in Belgium, France, Monaco and Austria since leaving the UK. As a writer, he specialises in business, science, medicine and environmental subjects.