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Thursday, March 8, 2018

Mexico warns Trump on steel tariffs

Por MRod

The tariffs proposed by the United States president could affect industries that depend on imported metals. Tariffs will make steel for infrastructure more expensive, including the border wall, while aggressive measures against exemptions will make the use of US steel mandatory. Mexico and Canada join the reactions to the measures announced by Donald Trump.

The incendiary announcement by President Donald Trump to impose tariffs on imports of steel and aluminum has not only touched the fiber of large producers and governments of the European Union and Asia, and triggered alarms in the Republican party itself: Mexico has responded this Monday that a measure of this nature will be answered on the same terms. "It's the wrong way to encourage the creation of a modern #TLCAN," Mexican economy secretary Ildefonso Guajardo said Monday in his Twitter account, referring to the renegotiation of the North American Free Trade Agreement (NAFTA, by its acronym in English), between Mexico, the US and Canada.

Guajardo said later in a radio interview that if the US government decides to apply this measure, Mexico will respond "at the same level of reprisals”. "You have to maintain the level of counterattack or response (...) you will not necessarily answer in steel (but) in (a) highly sensitive product that has political implications in many sectors," he said. Trump announced last Thursday that he would establish tariffs of 25% on imports of steel and 10% on aluminum imports, affirming later on Twitter that "commercial wars are good and easy to win".

The reactions appeared quickly, specifically in the Asian region. Now, Mexico has also voiced the thought on the matter. However, the concern also comes from Canada. Prime Minister Justin Trudeau telephoned President Trump on Monday to discuss the tariffs. Trudeau "strongly defended" the workers and industry of his country, a Canadian government official told Reuters, speaking on condition of anonymity, although both leaders had a constructive conversation.

Canada has also threatened to respond if Trump meets its promise to impose tariffs on steel and aluminum this week. In an attempt to iron out the issue with partners in North America, Trump tweeted on Monday that "tariffs on steel and aluminum could only be avoided if a new and fair Naphtha is signed." The US trade representative, Robert Lighthizer, explained that this means that Canada and Mexico could enjoy exemptions once an agreement was reached at NAFTA, and qualified the tariffs as an "incentive" to conclude the talks.

Sounds like menace to me. But even the president of the US House of Representatives, Republican Paul Ryan, expressed concern that a tariff measure such as the one proposed could trigger a "commercial war" that would hurt the US economy, as both Canada and Mexico send more than 75% of their exports of goods to the United States. This seems another story with possible bad implications for Trump and the USA.