Mexico City | Reuters — Mexico responded in kind to U.S. President Donald Trump’s metals tariffs by imposing its own duties on U.S. steel on Tuesday, while also targeting politically sensitive agricultural products from pork to bourbon.
Mexico’s peso tumbled to its weakest level since February 2017, leading losses among major currencies due to the rising trade tensions between the two neighbours.
As of Tuesday, Mexico will impose tariffs of 25 per cent on U.S. steel products, the Mexican economy ministry said in a list published in the government’s official gazette.
The list also 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. Separately, Mexico opened a tariff-free quota for pork imports from other countries.
Mexico said late last week it would respond to Trump’s tariffs on steel and aluminum with duties on products from congressional districts that Trump’s Republican party is fighting to retain in elections in November. It did not provide exact details of the proposed measures at the time.
Pork exporter Iowa, where incumbent Representative Rod Blum is seen as vulnerable, is an example of a place Mexico’s reaction could hurt Trump’s party.
Trump’s administration imposed tariffs of 25 per cent on imported steel and 10 per cent on aluminum in March, citing national security grounds. Last week Washington said it was moving ahead with the metals tariffs on imports from Canada, Mexico and the European Union, ending a two-month exemption.
Mexico’s economy ministry said on Monday it will start a dispute settlement process at the World Trade Organization over the U.S. steel and aluminum tariffs, joining the European Union in seeking WTO involvement against the new measures.
Meanwhile White House economic adviser Larry Kudlow said Tuesday that Trump is considering a shift in the effort to revamp the North American Free Trade Agreement (NAFTA) by moving to separate talks with Canada and Mexico.
“He is very seriously contemplating kind of a shift in the NAFTA negotiations. His preference now, and he asked me to convey this, is to actually negotiate with Mexico and Canada separately,” Kudlow said in an interview with Fox News.
“He may be moving quickly towards these bilateral discussions instead of as a whole.”
The U.S., Canada and Mexico have been in months of negotiations to rework the North American Free Trade Agreement, which Trump has long criticized as having harmed the U.S. economically.
In Ottawa, a Canadian official indicated there would be no change in the government’s approach.
“NAFTA is a trilateral agreement and we continue to negotiate that trilateral agreement,” said the official, who declined to be identified given the sensitivity of the situation.
The U.S. has mused before about separate deals, including when Prime Minister Justin Trudeau held talks with Trump in Washington last October, the official added.
On Friday, Trump said he might prefer to end NAFTA in favour of separate bilateral agreements with the two U.S. neighbours.
— Reporting for Reuters by Michael O’Boyle, Eric Walsh, Doina Chiacu and David Ljunggren.