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Mexico Threatens to Walk Out of NAFTA Talks Over Tariffs

Tuesday, February 28, 2017
Sandler, Travis & Rosenberg Trade Report

Mexican Economy Minister Ildefonso Guajardo warned recently that his country will walk out of negotiations to renegotiate NAFTA if the U.S. presses forward with President Trump’s threat to impose tariffs on imports from Mexico. Talks are expected to get underway in the next few months and the three partner countries will likely attempt to conclude a revamped deal ahead of elections in the U.S. and Mexico in 2018.

The White House has floated the idea of a 20 percent tariff on goods imported from Mexico, but Guajardo made clear that Mexico would not accept such a proposal. “The moment that they say, ‘We’re going to put a 20 percent tariff on cars,’ I get up from the table,” he said in an interview with Bloomberg News. Guajardo asserted that even though the U.S. is a major export market for Mexico the country’s dozens of other existing and pending free trade agreements would render the elimination of NAFTA “manageable.”

Trump has consistently criticized NAFTA, terming it “one of the worst deals ever made by any country” in a recent speech, and blamed it for the loss of millions of U.S. manufacturing jobs. However, the Congressional Research Service has reported that the agreement’s net overall effect on the U.S. economy appears to have been relatively modest and that it did not cause the huge job losses or the large economic gains that had been predicted.

Talks on overhauling NAFTA are expected to begin relatively soon after the Trump administration’s trade negotiating team is in place. Trump has said that Commerce Secretary-designated Wilbur Ross will take the lead in the NAFTA negotiations, and the Senate was expected to confirm Ross Feb. 27. Robert Lighthizer, the president’s nominee for U.S. trade representative, has yet to be considered in the Senate. Treasury Secretary Steve Mnuchin was recently confirmed, while National Trade Council chief Peter Navarro and special representative for international negotiations Jason Greenblatt were directly appointed and did not require Senate approval.

Click here for more information on how to prepare your business for NAFTA and other potential trade-related changes.

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