Five days after President Trump imposed a new set of heavy tariffs on foreign steel and aluminum imports, Mexico hit back, announcing its own set of sweeping tariffs on US pork, steel, cheese, bourbon, apples, and other goods.
According to Mexican officials, they specifically chose to target goods from Republican strongholds, to hit Trump’s party where it hurts ahead of the midterm elections.
Overall, the new penalties will affect about $3 billion worth of US goods. The tax rates vary depending on the product, but most of them are high: There’s a 20 percent tariff on US pork shoulder and legs, and some bourbons and cheeses will be hit with 20 to 25 percent taxes.
Those kinds of taxes will make US goods a lot more expensive in the Mexican market and can dampen demand for them over time. That, in turn, would deal a blow to the US businesses that export them, forcing them to downsize operations and lay off workers.
Mexico is already making plans to find substitutes for the American goods it imports. Mexican Economy Minister Ildefonso Guajardo said on Tuesday that his country will import more pork products from Europe.
“It will surely come from Europe, from some European countries. The idea is to avoid an impact on the supply chain for processed meats, so there is not an impact on the consumer,” he told reporters in Mexico City.
Trump is infuriating many of the US’s closest trading partners
Mexico’s tariffs are retaliation for Trump’s decision to impose big tariffs on its steel and aluminum exports last week.
On Thursday night, Trump imposed 25 percent tariffs on steel and 10 percent tariffs on aluminum from the European Union, Mexico, and Canada.
Mexico didn’t choose the goods it wanted to hit with tariffs randomly. As the New York Times reports, Mexican officials said they intended to strike at areas tied to top Republicans, including “steel from Vice President Mike Pence’s home state of Indiana, motorboats from Senator Marco Rubio’s Florida, and agricultural products from the California district of Representative Kevin McCarthy, the House majority leader.”
On top of that, Iowa, which has three Republican Congress members, will feel pain from pork tariffs, and Senate Majority Leader Mitch McConnell’s home state of Kentucky could see its bourbon sales decline.
It’s a move that may make Republican politicians sweat as the November elections approach; the GOP is in serious risk of losing control of at least one chamber of Congress.
Mexico isn’t the only one acting: Every country that’s subject to Trump’s steel and aluminum tariffs is making plans to retaliate with tariffs of its own. Europe is considering targeting American bourbon, jeans, and motorcycle exports. Canada is looking to hit beer kegs and pizza.
On Tuesday, the Trump administration made things even more complicated, by suggesting that NAFTA talks between the US, Canada, and Mexico should be scrapped in favor of bilateral talks between the US and Canada, and between the US and Mexico.
Speaking on Fox & Friends, National Economic Council Director Larry Kudlow said the president’s preference was now to “actually negotiate with Mexico and Canada separately,” to speed up negotiations. But Mexico and Canada are sharply opposed to the idea and think it could end up threatening the very existence of NAFTA.
With the proposal to break up NAFTA talks and the steel and aluminum tariffs, Trump’s attempts to take a hard line in renegotiating NAFTA could backfire. He might end up with no deal at all.