In the most recent example of the global march towards economically ill-founded isolationism, Mexico has imposed tariffs on U. S. goods coming into the country:
A long-simmering trade dispute boiled over into sanctions on Monday after Mexico said it would raise tariffs on $2.4bn of US exports in retaliation for ending a pilot programme to allow Mexican trucks on American roads.
The announcement marks one of the first big tests for trade policy under President Barack Obama, who has sought to tread a fine line between assuaging his domestic constituencies and upholding the US’s international obligations.
Mexico said it would increase tariffs on 90 industrial and agricultural goods, likely to include politically sensitive farm products, after Congress last week killed a pilot programme allowing a limited number of Mexican trucks on American highways. Mexico obtained a judicial ruling in 2001 under the North American Free Trade Agreement (Nafta) allowing it to impose such sanctions, but has held off since the US introduced the pilot scheme.
The sanctions, which Mexican officials say are set to be imposed later this week, will be one of the largest acts of retaliation against US exports. US goods exports to Mexico totalled $151.5bn last year. On Monday, Gerardo RuÃz Mateos, Mexico’s economy minister, said: “We believe that the action taken by the US is wrong, protectionist and in clear violation of Nafta.â€
It takes two to tango: the U. S. is wrong in prohibiting short haul drayage by Mexican truckers across the border and Mexico is wrong in retaliating by imposing tariffs. The reasons presented for prohibiting the drayage are largely bogus and to the extent that they are justified should be dealt with more directly rather than a wholesale prohibition.
