US Exporters Fear Retaliation After Trump Threatens Mexican Tariffs

According to the White House's announcement of the five percent tariff -- scheduled to rise to 10 percent July, 1, 15 percent Aug. 1, 20 percent Sept. 1 and 25 percent Oct. 1 -- the tariffs will continue until the U.S. is satisfied with Mexico's efforts to curb immigrants crossing its territory. President Andres Lopez Obrador said May 31 that Mexico will not respond in a desperate manner, and will wait to see how the situation evolves. He said he doesn't believe in "a tooth for a tooth nor an eye or an eye because, ... we would all be toothless or blind." He said Mexico will attempt dialogue with the U.S, and that he thinks President Donald Trump will come to the realization that tariffs are not the way to solve the immigration issue.

Jorge Guajardo, former Consul General of Mexico to the U.S. in Austin, and a senior director at McLarty Associates, acknowledged that Obrador said he didn’t believe in an eye-for-an-eye response. But Guajardo, who also served as Mexico’s ambassador to China before joining McLarty, noted that the U.S. exported $299 billion to Mexico last year. Guajardo said the U.S. exports more to Mexico than China, Japan and South Korea combined.

"Mexico has much more artillery in its arsenal to retaliate,” he said, and he doesn’t see how Obrador could withstand the political pressure not to retaliate on June 10, even if 5 percent tariffs are not economically significant. “Mexico would not stand for being humiliated in this way without applying retaliatory measures,” he said. Mexico would have to be strategic, since many of the U.S. imports are inputs for Mexican industry, and putting tariffs on them would be a self-inflicted wound. But products where Mexicans are the end consumer – such as pork – are natural targets, he said.

Stephen Claeys, a trade lawyer at Wiley Rein, said he thinks Mexico will be reluctant to impose tariffs of its own. "I’d imagine they’d keep their powder dry at first and try to work through the issue," he said. "They might put out a proposed list so it’s out there. That would get the ag folks more concerned."

The National Pork Producers Council said U.S. pork producers “cannot afford retaliatory tariffs” from Mexico, which it said is its “largest export market.” The NPPC said Mexico “will surely implement” retaliatory tariffs. We appeal to President Trump to reconsider plans to open a new trade dispute with Mexico,” David Herring, president of the NPCC, said in a statement, calling for swift ratification of the U.S.-Mexico-Canada trade agreement. “We hope those members of Congress who are working to restrict the administration’s trade relief programs take note. While these programs provide only partial relief to the damage trade retaliation has exacted on U.S. agriculture, they are desperately needed.”

Tariffs Hurt the Heartland, a campaign of more than 150 U.S. retail, technology, manufacturing and agriculture companies, echoed those concerns. “These tariffs will likely invite retaliation on the products we export to Mexico,” it said in a statement, mentioning agricultural products, electronics, engines and car parts. Farmers will “now be faced with more uncertainty and new trade barriers,” the statement said.

The Consumer Technology association also attacked the new Mexican tariff threats, saying retaliation from Mexico could be damaging. “Mexico is not only one of our top trading partners, it's the number one export market for American consumer technology sector products,” said CTA President Gary Shapiro. If Mexico retaliates with tariffs of its own, he said, U.S. “employers and workers will end up paying twice over for the administration's misguided trade policies."