Though Mexico removed 16 items from the tariff list, the additions mean a net increase of 10 new U.S. exports facing Mexican duties and raise the value of the exports hit to $2.6 billion from $2.4 billion. The list of 99 items was released Wednesday and went into effect Thursday.
This is bad news for U.S. producers whose goods compete with exports from countries like Canada and Chile, which have free trade agreements with Mexico. It is a wound that the fragile and export-dependent U.S. economic recovery can ill afford.
It is also self-inflicted. Under the 1993 North American Free Trade Agreement (Nafta), goods and services are supposed to flow largely tariff-free across the Mexican, U.S. and Canadian borders. But the U.S. hasn’t kept its side of the bargain, refusing for 15 years to allow Mexican trucking companies to compete on American soil.
President Clinton first yielded to pressure from the International Brotherhood of Teamsters to block Mexican trucks in 1995. Mexico pursued fruitless negotiations for five years, finally winning an appeal to a Nafta resolution panel in 2001. The Bush Administration promised to respect the panel’s ruling but it waited until 2007 to launch a pilot program to allow a limited number of Mexican long-haul trucks into the U.S. and test their safety. The program demonstrated that Mexican trucks are as safe as their U.S. counterparts. But that didn’t matter to Congressional Democrats who killed the pilot program in 2009.
That’s when Mexico decided to retaliate by placing selective tariffs on U.S. exports. Now it is raising the ante. New additions include pork, ketchup, chewing gum, grapefruit, chocolate and dried fruit. Tariffs remain on pears, apricots, cherries, peas, almonds, potatoes and wines.
Mexican Economy Minister Bruno Ferrari said Thursday that imports of the products on the list dropped 81% in the first year after the tariffs were imposed in March 2009, but Mexico has made clear that it doesn’t want this trade war. Its own trucking industry is open to U.S. competition, and it has carefully targeted its tariffs to hit U.S. goods that Mexicans can import from other countries. A Mexican official told us this week that Mexican President Felipe Calderón discussed the trucking issue with President Obama during his visit to Washington in May, but that three months later “nothing has happened.”
As we look at the new tariff list and its timing, we have to wonder if the Mexicans have the American election calendar in mind. Wisconsin (Russ Feingold), Washington (Patty Murray) and California (Barbara Boxer) are all states with Democratic Senators who follow the Teamster line.
When the new Mexican tariffs inevitably cost American workers their jobs, they should send the bill for unemployment benefits to those Senators—and their Teamster major domo, James Hoffa.
