Tag Archive for: tariffs

United States seeking Mexican steel export quotas: negotiator

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Reuters / Frank Jack Daniel / October 15

 

MEXICO CITY (Reuters) – The United States is seeking to impose quotas on Mexican steel exports as part of a negotiation to remove metals tariffs, the chief trade negotiator of Mexico’s incoming government said on Monday, adding the issue needed to be resolved within weeks.

The administration of U.S. President Donald Trump imposed the tariffs on Canada and Mexico in June, citing national security reasons. Although the three countries agreed a renewed trade deal earlier this month, the measures remain in place.

Jesus Seade, who represented Mexico’s President-elect Andres Manuel Lopez Obrador in the wider trade talks, said the current Mexican government was leading the metals talks but that he had spoken to U.S. Trade Representative Robert Lighthizer on the matter.

“I have had a couple of calls with Lighthizer, and it is along those lines, to manage volumes etc with Mexico and with Canada,” Seade said in an interview with Reuters, declining to give more details about the content of the discussions.

Seade said the issue of tariffs on Mexican steel had to be resolved before the new government takes office on Dec. 1.

“There is a month-and-a-half left, so it needs to be resolved now,” he said.

Mexico’s economy ministry, which leads trade talks, did not immediately respond to a request for comment.

Mexico is a net importer of steel from the United States, although it did export $2.5 billion of iron and steel to its northern neighbor in 2017, according to the U.S. Census Bureau.

In March, the United States signed a deal with Seoul where in exchange for an end to steel tariffs, South Korea agreed to cut exports by 30 percent of the past three years’ average.

During talks on the new United States-Mexico-Canada Agreement (USMCA), U.S. officials told Canada they wanted a similar arrangement for steel and aluminum, one source told Reuters last week, declining to give specific details.

Canada rejected the demand and made clear any cap on the metals would have be at a level higher than current exports to allow room for shipments to grow.

 

Reuters / Frank Jack Daniel / October 15

 

How President Trump’s Trade Deals Could Lift the US Economy

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Market Realist / Mark O’Hara / October 8

Trade deals

President Donald Trump has long lashed out against existing trade deals, calling them unfair to the United States. The Trump administration has been working to renegotiate several trade deals, and the focus has been on reducing the country’s massive trade deficit by moving its manufacturing onshore.

UMSCA

The Trump administration has used tariffs as well as tariff threats to obtain trade concessions. Less than halfway into his presidential term, Trump has renegotiated NAFTA and KORUS FTA (the United States–Korea Free Trade Agreement).

Under the new NAFTA—renamed USMCA (the United States–Mexico–Canada Agreement)—the United States is expected to gain access to Canada’s historically protected dairy industry. It also calls for more regional content in automotive manufacturing.

Under the new KORUS terms, South Korea relaxed the norms for automotive imports from the United States. It also agreed to a quota to obtain long-term exemptions from the Section 232 steel tariffs in the United States (QQQ).

Section 232 tariffs

Trump’s trade rhetoric has received support as well as opposition. Retail and tech giants such as Walmart (WMT), Alphabet (GOOG), Apple (AAPL), and Amazon (AMZN) are lobbying against these tariffs. However, the new trade deals have allowed the Trump administration to obtain incremental benefits that are expected to support US jobs. We’ve seen plant restarts in the US steel and aluminum industry after the Section 232 tariffs were implemented.

 

Market Realist / Mark O’Hara / October 8

 

Mexico and U.S. studying NAFTA rules of origin proposals – minister

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REUTERS / Adriana Barrera / August 6

 

MEXICO CITY (Reuters) – Mexico’s economy minister Ildefonso Guajardo said on Monday the country has put forward a proposal to update the North American Free Trade Agreement’s contentious rules of origin, and in turn was studying the U.S. position.

The United States has demanded tougher rules of origin, particularly on what percentage of a car needs to be built in the NAFTA region to avoid tariffs than outlined in the current trade deal.

“We have a proposal on the table, we’re analyzing some characteristics of the U.S. position, and we’re doing it clearly in line with our dialogue with Mexico’s auto industry,” Guajardo told reporters after an event in Mexico City.

U.S. President Donald Trump, who launched the renegotiation of the 1994 pact a year ago, has said he wants the reworked deal to bring manufacturing jobs back to the United States.

Guajardo on Monday also said that Canada, which is not participating in U.S.-Mexico talks that began in Washington two weeks ago after months of negotiations between the three trade partners, could join next week, depending on progress in the next few days between Mexico and the United States.

The bilateral meetings have yielded important developments, Guajardo said, adding that he will return to Washington midweek. He did not give details.

Mexican sources briefed on the negotiations have said Mexico has offered to raise the threshold for regional content beyond a May proposal of 70 percent, up from the current level of 62.5 percent. The United States is seeking 75 percent as well as demanding a proportion of vehicles be made in factories paying $16 an hour or more.

Mexico’s El Economista financial newspaper on Monday reported that Mexico had agreed to those demands, in return for a five-year transition period. Asked about the reports, Mexico’s chief trade negotiator Kenneth Smith said that no deal on autos had yet been reached.

“We haven’t closed or resolved this chapter yet,” Smith told reporters after the same event in Mexico City, saying that Canada also needed to take part before negotiators could reach final decisions.

Smith said Mexico and the United States were discussing technical details and each other’s proposals involving the auto sector, and that Mexico was explaining the areas it considered particularly sensitive.

He also said Mexico would not budge on its rejection of U.S. bids for seasonal restrictions on fresh products or a sunset clause that could strike down NAFTA agreements after five years.

 

REUTERS / Adriana Barrera / August 6

 

 

Trump, Mexico expect progress in stalled NAFTA talks

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Investing / Reuters / Anthony Esposito and Adriana Barrera / July 24

 

PUERTO VALLARTA, Mexico (Reuters) – U.S. President Donald Trump spoke warmly of Mexico’s incoming leftist president on Monday, saying he expected to get “something worked out” on NAFTA, while a top Mexican official said there was scope to revive the trade talks this week.

“We’re talking to Mexico on NAFTA, and I think we’re going to have something worked out. The new president, terrific person,” Trump said in a speech at the White House about American manufacturing.

“We’re talking to them about doing something very dramatic, very positive for both countries, he said, without giving more details.

Talks to reshape the 1994 trade accord have been underway since last August. But they stalled in the run-up to the July 1 presidential election in Mexico, which produced a landslide victory for veteran leftist Andres Manuel Lopez Obrador.

The United States, Mexico and Canada have been at odds over U.S. demands to impose tougher content rules for the auto industry, as well as several other proposals, including one that would kill NAFTA after five years if it is not renegotiated.

Mexican Economy Minister Ildefonso Guajardo, who last week expressed hope an agreement in principle on NAFTA could be reached by the end of August, is due to hold talks with U.S. Trade Representative Robert Lighthizer at the end of the week in Washington.

He will be accompanied by Jesus Seade, the designated chief NAFTA negotiator of the incoming Mexican administration.

“There’s clearly a window of opportunity to be able to bed down a series of open issues which are not numerous, but are very complex,” Guajardo said on the sidelines of a summit of the Pacific Alliance trade bloc in the western coastal city of Puerto Vallarta.

Guajardo is due to meet his Canadian counterpart Chrystia Freeland on Wednesday, also to discuss NAFTA.

After the election, top officials from both the outgoing and new Mexican governments met in Mexico City with senior Trump administration officials led by Secretary of State Mike Pompeo.

Seade said the visit had sent out “excellent” signals.

“We hope these signals translate into a willingness to move forward,” Seade told reporters in Puerto Vallarta.

The talks have been clouded by tit-for-tat measures over trade after the Trump administration slapped tariffs on U.S. steel and aluminum imports.

The United States is also exploring the possibility of imposing tariffs on auto imports, though Guajardo said it was too early to speculate on how that would play out.

Mexico’s foreign ministry said on Monday that South Korea had initiated the process of seeking associate membership in the Pacific Alliance, which comprises Colombia, Chile, Mexico and Peru and is seeking to deepen free trade.

Singapore, Australia, New Zealand and Canada were last year admitted as associate members by the alliance. For Mexico, the expansion is part of a push to diversify its trading partners in the wake of Trump’s previous threats to pull out of NAFTA.

Guajardo indicated that despite his optimism about reaching a deal, risks still exist.

“The biggest risk is that instead of moving forward with an agenda of opening and integration, we move backwards, closing our economy and really undoing what we’ve built in the last two and a half decades,” Guajardo said.

 

Investing / /Reuters / Anthony Esposito and Adriana Barrera / July 24