Mexico Still Working on Retaliatory Tariffs With US Tariff Threat on Hold

Mexico will be ready with a list of retaliatory tariffs should the U.S. end up imposing escalating tariffs announced by President Donald Trump at the end of May, Secretary of Economy Graciela Marquez Colin said in remarks to the Mexican Senate June 14. Work continues on the specifics of the list during the 45-day period Mexico has to reduce migration under the deal before the U.S. says it will again consider imposing tariffs (see 1906120039).

Though Marquez declined to list products that would be subject to tariffs, she did outline criteria Mexico would use to create its list. Retaliatory tariffs would be designed so they don’t affect consumption of basic goods and don’t harm production chains that have developed between the U.S. and Mexico, Marquez said. They would focus on luxury goods and products for which there are alternative markets, as well as goods that are politically sensitive. Mexico considered similar criteria for its tariff retaliation against now-removed Section 232 tariffs on steel and aluminum, she said.

Mexico also plans to take legal recourse if tariffs are imposed, Marquez said. It would begin Article 20 dispute settlement proceedings under NAFTA (or if the U.S.-Mexico-Canada Agreement is approved, Article 31 proceedings). Mexico would also initiate a case at the World Trade Organization, she said.

Mexico is heartened by the use of the International Emergency Economic Powers Act (IEEPA) as the authority for the tariffs, which Marquez said gives Mexico a legal basis for a challenge. IEEPA has traditionally been used against enemies of the U.S., being applied in the past to Iran, Syria, Libya and Somalia, Marquez said. “Far from being enemies of the United States, we are its partners,” she said. “We are its strategic partners.”

Mexico would also undertake internal policies in the form of sectoral support programs to reduce the impact of any U.S. tariffs, Marquez said. That would include reducing costs and simplifying procedures for Mexican exporters via automation, which the Mexican government has been working on since December, she said.

Marquez also returned time and again to the broader goal of diversifying Mexico’s trade partners in an effort to lessen the effects of any future tariff threats. “We are analyzing day to day how international commerce moves, how we can change markets, how we can grow our presence in other markets,” she said. “How we can have an international presence that would be less vulnerable than the one we have, that would be less vulnerable to a tweet, that can be less vulnerable to a relief valve of the internal politics of the United States.”