Mexico Suggests Retaliatory Tariffs After Trump Threat

By Ryan Hanrahan

The Associated Press reported Tuesday that “President Claudia Sheinbaum suggested Tuesday that Mexico could retaliate with tariffs of its own, after U.S. President-elect Donald Trump threatened to impose 25% import duties on Mexican goods if the country doesn’t stop the flow of drugs and migrants across the border.”

“Sheinbaum said she was willing to engage in talks on the issues, but said drugs were a U.S. problem,” the AP reported. “‘One tariff would be followed by another in response, and so on until we put at risk common businesses,’ Sheinbaum said, referring to U.S. automakers that have plants on both sides of the border.”

“Sheinbaum said Mexico suffered from an influx of weapons smuggled in from the United States, and said the flow of drugs ‘is a problem of public health and consumption in your country’s society,'” the AP reported. “Sheinbaum also criticized U.S. spending on weapons, saying the money should instead be spent regionally to address the problem of migration. ‘If a percentage of what the United States spends on war were dedicated to peace and development, that would address the underlying causes of migration,’ she said.”

Retaliatory Tariffs Could Be Placed on U.S. Ag Products

While Sheinbaum insinuated that Mexican tariffs could affect automakers, retaliatory tariffs placed on the United States also often target the agriculture and food industry, and Mexico did just that in 2018 in the lead up to the negotiation and signing of the United States-Mexico-Canada Agreement (USMCA).

According to the USDA Economic Research Service’s Stephen Morgan, “in 2018, the United States imposed tariffs on steel and aluminum imports from major trading partners and separately placed tariffs on a broad range of imports from China. In response, Canada, China, the European Union (EU, including the United Kingdom), India, Mexico, and Turkey imposed retaliatory tariffs on many U.S. exports, including a wide range of agricultural and food products.”

“In July 2018, Canada and Mexico also imposed retaliatory tariffs on U.S. agricultural products. Canada imposed tariffs of 10 percent on goods including prepared food products, coffee, and orange juice. Mexico imposed tariffs ranging from 15 to 25 percent on products including pork, fresh and processed fruit, and processed vegetables,” Morgan reported. “Leading up to the signing of the United States-Mexico-Canada Agreement (USMCA, formerly the North American Free Trade Agreement), the three trading partners reached a deal to have an import-monitoring mechanism for steel and aluminum. In turn, Canada and Mexico lifted their retaliatory tariffs in May 2019.”

What Tariffs on Canada and Mexico Could Make More Expensive

Newsweek’s Martha McHardy reported that “Canada and Mexico are also significant exporters of agricultural goods to the U.S., including fruits, vegetables, meat and dairy. A 25 percent tariff would make everyday staples such as avocados, tomatoes, beef and cheese more expensive for U.S. consumers.”

“Canadian beef exports across all markets are projected to total 595,000 tons this year, with about 80 percent destined for U.S. customers,” McHardy reported. “Last year, the U.S. imported $2.7 billion worth of avocados from Mexico, the U.S. Department of Agriculture reported.”

Reuters’ Leah Douglas and Ed White reported that “U.S. prices may rise next year for avocados, strawberries and other fresh produce, and consumers could face shortages, if President-elect Donald Trump follows through on plans to slap tariffs on goods from Mexico and Canada, agricultural economists and industry executives said.”

“U.S. consumers would feel impacts at grocery stores and restaurants, with items being out of stock, Lance Jungmeyer, president of the Fresh Produce Association of the Americas, said on Tuesday,” according to Douglas and White’s reporting. “‘We would see fewer items in general in the produce section,’ Jungmeyer said. ‘Restaurants would have to reconfigure their menus, maybe putting in less fruits and vegetables or decreasing portions.'”

“About two-thirds of all U.S. vegetable imports and half of fruit and nut imports come from Mexico, according to the USDA: nearly 90% of its avocados, as much as 35% of its orange juice, and 20% of its strawberries,” Douglas and White reported.