Mexican Economy Minister Will Say 'Bye-Bye' to NAFTA Talks If Tariffs Are Imposed
Ildefonso Guajardo, Mexico’s senior trade negotiator, reaffirmed his position to break off talks to reconfigure NAFTA, saying his country will completely abandon talks if the United States continues threatening levies and caps on products coming in from its southern border. He said Mexico will refuse to even consider the kind of tariffs President Trump has discussed and revert back to World Trade Organization rules. Under those guidelines, the most the U.S. could impose on a Mexican product would average 3 percent.
“The moment that they say, ‘We’re going to put a 20 percent tariff on cars,’ I get up from the table,” Guajardo said in an interview. “Bye-bye.”
Official talks are to expected to begin in June, despite both sides having already publicly expressed their positions. Trump has repeatedly faulted NAFTA for creating an imbalance that favors Mexico while Guajardo suggested it is a necessary to maintain a healthy trading relationship between the two countries. If talks do break down, the Mexican economy minister was quoted by Bloomberg as saying “it wouldn’t be an absolute crisis.”
At that point trade between Mexico and the U.S. would be regulated by the WTO. While not ideal, Guajardo says it would be preferable to high tariffs from the north. Of course, that is only if the United States doesn’t also back out of the WTO — unlikely as that may be.
“Economic logic tells us that it would really be the nuclear option for the U.S. to abandon the multilateral trading system,” he explained. “But I can’t rule out something that would be a decision of a different government.”
[Image: Jrsnchzhrs/ Flickr ( CC BY-ND 2.0)]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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* First, screw up the Mexican economy with a needless trade war. * Then, watch the number of illegal immigrants (which has been declining since 2009) promptly skyrocket. * Next, claim that now more than ever, a wall is needed, and it's the only thing that can stop illegal immigration. * Spend at least $20 billion of U.S. taxpayer money on said wall, which is never completed and only marginally effective. * Hold some photo ops and rallies near the wall. Declare victory.
I'm sure Trump will respond with more bellowing tough talk via Twitter. I mean he is on a roll after showing those Trans school kids who's boss.
This really is a bizarre position from Mexico. Mexican wages have not improved. They should be putting a tariff on goods headed to the USA and use the proceeds for programs to lift their poor.
So, to translate: the president of the United States can't tell other countries what to do. Seems I was making this point long before the election happened...but what do I know? Am I in favor of getting a better trade agreement? Absolutely. But we'd be foolish to screw Mexico over economically. If we do, then all the problems that send so many Mexicans over our border will just become more severe. And the idea of an economically de-stabilized country that shares thousands of miles of lightly defended border territory should be scary to any thinking person. Instability causes power vacuums. In Mexico, who would fill that vacuum? It'd be people like El Chapo...or perhaps even a Hugo Chavez type. Trump needs to tread carefully, which he is incapable of doing.