As reported in the linked article, in retaliation against the U.S. for ending a program that would have given Mexican trucks free rein on America’s highways (thanks to Congress), Mexico has slapped tariffs on American food exports.
Mexico slapped tariffs on 90 American agricultural and manufactured exports on Monday in retaliation for Washington’s move to block Mexican trucks from using U.S. highways.
Not all U.S. food exports, though:
But a spokesman for the Mexican economy ministry said the new tariffs would not affect rice, corn, beans or wheat, which are the main U.S. farm products exported to Mexico and make up much of the average Mexican’s diet.
Unfortunately, it appears that the response by the Obama administration to the first trade challenge of its administration is weak:
President Barack Obama‘s administration, facing its first dispute with a major trading partner and neighbor, promptly said it would work to create a new cross-border, long-distance trucking program between the two countries.
“The president has tasked the Department of Transportation to work with the U.S. trade representative and the Department of State, along with leaders in Congress and Mexican officials to propose legislation creating a new trucking project that will meet the legitimate concerns of Congress and our NAFTA commitments,” White House spokesman Robert Gibbs said.
I hope this is just a stalling tactic, but this wimpy response is really disappointing. The proper response would have been an immediate imposition of a small tariff – about 5% – on all Mexican manufactured goods, a tariff that would be ratcheted ever higher if there was further retaliation by Mexico. After all, with an annual trade deficit with Mexico of about $37 billion in manufactured goods, it’s impossible for the U.S. to come out the loser in a trade war with Mexico. It’s a perfect opportunity to demonstrate to the other parasitic economies of the world that they are in no position to dictate trade terms when they are the ones with the trade surplus. But if the response by Obama is any indication, it’s an opportunity that will be lost.