Mexico Says it Will Retaliate on Any U.S. Steel, Aluminum Tariffs, Rejects Linking Issue to NAFTA Talks

By Mark Browne | March 7, 2018 | 5:02pm EST
Mexican economy minister Ildefonso Guajardo. (Screen capture: YouTube)

Mexico City ( – Mexico is pledging to retaliate by imposing new taxes on “politically sensitive” imports from the U.S. if President Trump includes Mexico in his proposed tariffs on imported steel and aluminum.

“We have the capacity to respond,” Ildefonso Guajardo, Mexico’s economy minister said in a round of interviews with the Mexican media this week.

“If they don’t exempt Mexico and Canada what we have to do is sharpen a list of the things they most export that are the most sensitive politically and focus exactly on them,” Guajardo told Televisa in Mexico City.

He said a list of imported products from the U.S. is being analyzed for potential Mexican tariffs, but has not yet been made public.

In a meeting with steel and aluminum industry executives last week, Trump said he would impose 25 percent and 10 percent tariffs on imported steel and aluminum respectively for an “unlimited period.”

Since then, the president has said on his Twitter account that his proposed tariffs would be lifted on Mexican and Canadian steel and aluminum imports if a “new & fair NAFTA agreement is signed.”

The three countries finished a seventh round of negotiations to renew the North American Free Trade Agreement last week.

Guajardo told Mexican media outlets that linking the NAFTA talks to the proposed steel tariffs was a “perverse” way to “incentivize” the trade negotiations.

“It’s necessary to be a little calm,” he told Televisa, adding “I’ll remind you that with Trump, nothing is for sure.”

On Twitter and in interviews, Guajardo argued that Mexico should not be included in tariffs on imported steel to the US. because “Mexico buys more steel from the U.S. than it sells to the U.S.”

The U.S. steel trade surplus with Mexico totaled $3.6 billion dollars over the past two years, according to a statement issued by Mexico’s National Chamber of the Iron and Steel Industry.

Mexico would be obliged to immediately impose equal tariffs on imported U.S. steel if the tariffs proposed by Trump were applied to Mexico, the group said.

“We are a fully integrated region where the majority of U.S. steel exports are made to Mexico and Canada (76%).”

A tariff on Mexican steel would be a “hit to Mexico,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics.

She predicted that neither Canada nor Mexico would accept linking the outcome of the NAFTA talks to the issue of their inclusion or otherwise in the proposed tariffs.

“It does derail the NAFTA negotiations to an extent, if not completely.”

No progress has been made on the most difficult issues standing in the way of a successful renegotiation of NAFTA, de Bolle said.

They include demands by the U.S. that 50 percent of the parts in all automobiles imported to the U.S. from Mexico or Canada be made in North America, and a sunset clause requiring the trade agreement to be reopened every five years unless the three countries all agree to continue it as is.

“We’re still at the same stalemate. I don’t see how these issues are going to be dealt with anytime soon.”

“We have not made the progress that many had hoped,” Ambassador Robert Lighthizer, the lead negotiator for the U.S. said at the conclusion of the seventh round of talks last week.

Presidential elections in Mexico in July, mid-term elections in the U.S. in November and elections this year in Ontario and Quebec “complicate” the talks, he said.

“I fear that the longer we proceed, the more political headwinds we will feel.”

The three countries have agreed to include a chapter on energy in the new agreement, Lighthizer announced.

Mexico is a major importer of U.S. natural gas and refined petroleum products.

Andres Manuel Lopez Obrador, a left-leaning candidate for president in Mexico who currently leads in the polls, has promised to move Mexico towards energy self-sufficiency if he is elected in July, reducing the country’s energy imports from the U.S.

If elected, he would modernize the country’s six refineries and build two new ones in order to end the importation of gasoline and diesel fuel, Lopez Obrador said in a posting on his website.


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