Mexico selective tariffs hit $48b of imports

Mexico‘s choice to impose tariffs on select goods imported from nations lacking trade agreements will affect roughly $48 billion of the country’s imports, constituting around 7 per cent of the total imports of the country, a Finance Ministry source told Bloomberg.

These new tariffs, perceived as a reaction to US worries regarding the influx of Chinese steel and other commodities into Mexico, will encompass aluminum, textiles, and plastics.

Rodrigo Mariscal, who heads the Economic Planning unit at the Finance Ministry, anticipates that once enforced, these tariffs could curtail Mexican imports by $6 billion to $7 billion, highlighting the ministry’s belief in their minimal impact.

“We don’t view it as fundamentally significant,” stated Mariscal.

Recently, President Andres Manuel Lopez Obrador’s administration issued a decree imposing temporary tariffs ranging from 5 to 50 per cent on over 500 types of goods, including aluminum, wood, chemicals, paper, cardboard, glass, and electrical equipment, among others.

The government decree states that this decision aims “to ensure certainty and equitable market conditions for sectors of the national industry facing vulnerability due to practices disrupting international trade.” It also aims to uphold competitiveness in electricity, electronics, automotive, and auto parts sectors.

Primarily directed towards China, the new tariffs follow the US accusation of China manipulating global prices through excessive production of goods often sold below production costs.

Earlier this month, US Trade Representative Katherine Tai highlighted cases where steel, not originally from Mexico, was processed there and then improperly exported to the US as if it originated in Mexico.

Mexico’s Economy Minister Raquel Buenrostro remarked last week that these actions, alongside an earlier measure to enhance steel tracing, should assuage some US concerns. She noted that the tariffs target goods with prices below production costs or subsidised ones, aiming to foster “fairer trade conditions.”

In response, some Chinese aluminum fabricators are adjusting their international shipments, noted Liu Xiaolei, an analyst with Shanghai Metals Market.