June 5, 2018
Mexico imposed wide-ranging tariffs on American products ranging from steel to pork and bourbon on Tuesday, responding to President Donald Trump’s metals tariffs and taking aim at Republican strongholds ahead of U.S. congressional elections in November.
Mexico’s retaliation further raises trade tensions between the two countries, which have been echoed in dealings between Washington and Ottawa. Trump last week rattled some of the closest U.S. allies by removing an exemption to tariffs on imported steel and aluminum that his administration had granted to Mexico, Canada and the European Union.
According to Reuters, Trump advisor Larry Kudlow revived the possibility that the president will seek to replace the trillion dollar North American Trade Agreement (NAFTA) with bilateral deals with Canada and Mexico.
Following news of the new Mexican tariffs, which take effect immediately, the peso tumbled to its weakest level since February 2017, leading losses among major currencies.
Mexico’s retaliatory list included a 20 per cent tariff on U.S. pork legs and shoulders, apples and potatoes and 20 to 25 per cent duties on types of cheeses and bourbon, the Mexican economy ministry said in the government’s official gazette
A range of U.S. steel products will be hit by 15 per cent to 25 per cent tariffs. Mexico is a net importers of U.S. steel.
Separately, Mexico opened a tariff-free quota for pork imports from other countries.
It was not immediately clear where Mexican importers would buy pork from under the quota, which it said was opened to avoid an increase in the price of the meat used in many traditional dishes. No. 2 supplier Canada enjoys duty free access to Mexico under NAFTA, while the European Union was already gearing up to export more to Mexico under a recently reworked trade pact.