Updated – Eye on Trump strongholds, Mexico hits back with pork, bourbon tariffs (Reuters)

Commentary, News

Mexico’s retaliation further raises trade tensions between the two countries, which have been echoed in dealings between Washington and Ottawa. Trump last week rattled some of the closest U.S. allies by removing an exemption to tariffs on imported steel and aluminum that his administration had granted to Mexico, Canada and the European Union.

Meanwhile, Trump advisor Larry Kudlow revived the possibility on Tuesday that the president will seek to replace the trillion dollar North American Trade Agreement (NAFTA) with bilateral deals with Canada and Mexico.

Following news of the new Mexican tariffs, which take effect immediately, the peso MXN=MXN=D2tumbled to its weakest level since February 2017, leading losses among major currencies.

Mexico’s retaliatory list included a 20 percent tariff on U.S. pork legs and shoulders, apples and potatoes and 20 to 25 percent duties on types of cheeses and bourbon, the Mexican economy ministry said in the government’s official gazette

A range of U.S. steel products will be hit by 15 percent to 25 percent tariffs. Mexico is a net importers of U.S. steel.

Separately, Mexico opened a tariff-free quota for pork imports from other countries.

It was not immediately clear where Mexican importers would buy pork from under the quota, which it said was opened to avoid an increase in the price of the meat used in many traditional dishes. No. 2 supplier Canada enjoys duty free access to Mexico under NAFTA, while the European Union was already gearing up to export more to Mexico under a recently reworked trade pact.

Brazil is another potential beneficiary.

Mexico’s trade negotiators designed the list, in part, to include products exported by top Republican leaders’ states, including Indiana where Vice President Mike Pence was formerly governor, according to a trade source familiar with the matter. Bourbon-producing Kentucky is the home state of Senate Majority Leader Mitch McConnell.

Read the full article at Reuters.com

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