Thursday, May 23, 2024

Steelmakers estimate tariffs will cost US $2 billion annually

Mexican steelmakers estimate that the United States’ steel tariff will cost the domestic industry US $2 billion annually, and urged the government to take urgent reciprocal action.

The Mexican Iron and Steel Industry Chamber (Canacero) also expressed its “concern and disappointment” with the United States government’s decision to apply the 25% tariff, which it said made no sense and didn’t contribute to a constructive climate in the North American region.

Imposing equal measures on all U.S. steel “will harm more than benefit the United States industry” because the United States’ surplus with Mexico in the steel sector over the past two years is US $3.6 billion, the industry group said in a statement.

Canacero said the measures taken must apply “without exceptions” to the same products that the United States has imposed tariffs on and be set at the same rate.

“A lesser decision would be unacceptable,” the statement said.

Canacero challenged the justification for the tariffs, saying “Mexico does not represent, in any sense, a threat to the national security of the United States.”

It also called on the government to continue to seek an exemption from the tariff, citing Argentina, Brazil and South Korea as countries that have managed to reach agreements with the U.S. that have allowed them to avoid the hefty steel duty.

The chamber stressed that the steel market in North America is completely integrated and pointed out that 76% of United States exports of the metal go to Mexico and Canada.

To further protect the Mexican steel industry, Canacero said, the government must “stop the avalanche of steel imports” by imposing a 25% tariff on steel from countries that Mexico doesn’t have a trade agreement with and establishing quotas for nations that have signed a pact with Mexico.

“The Mexican government must be prepared to adopt appropriate and immediate measures . . . in order to avoid this problem resulting in the closure of companies and the loss of tens of thousands of jobs,” the statement concluded.

After the United States tariffs became known yesterday, Mexico struck back swiftly by announcing that it would “impose equivalent measures” on U.S. imports to Mexico including steel flats and pork.

The plan to tax the latter product rattled meat markets in the United States yesterday, causing meat producers’ shares to tumble and hog futures to slump.

News agency Bloomberg said that about 22% of U.S. pork is exported and Mexico is the largest customer by volume.

During times of record production of hams, Mexico has been a key importer and helped to support the value of pigs in the United States.

Dan Halstrom, the CEO of the U.S. Meat Export Federation, told Bloomberg in an emailed statement that “it is especially frustrating to see U.S. pork caught up in a dispute that has nothing whatsoever to do with pork trade.”

“If these [pork] tariffs are implemented, they will negatively impact millions of consumers and thousands of people in the meat and livestock industries on both sides of the border.”

The United States steel and aluminum tariffs, which also apply to Canada and the European Union (EU) starting today, were condemned by Canadian Prime Minister Justin Trudeau who called them “totally unacceptable,” while the leaders of Germany and France, Angela Merkel and Emmanuel Macron, both labelled the tariffs “illegal.”

Mexico Economy Secretary Ildefonso Guajardo described them as “completely incomprehensible.”

The four presidential candidates also weighed in on the protectionist measures.

Frontrunner Andrés Manuel López Obrador called on the Mexican government to respond firmly to the U.S. decision but warned against engaging in a trade war. He also said the government must try to reason with U.S. President Donald Trump.

Speaking at a Morena party rally in Guanajuato, the third-time candidate said the United States’ move served as a wake-up call for Mexico to diversify its trade relationships, strengthen its internal market and not depend solely on trade with its northern neighbor.

Second-placed Ricardo Anaya, who trails López Obrador by 26 points in a recent Reforma poll, also said that Mexico needs to diversify its export markets, adding that it should turn to international multilateral organizations to resolve trade disputes with other countries.

He described the tariff as serious for the Mexican economy but said that if “we act intelligently and strategically, Mexican can [still] achieve a good NAFTA deal.”

Placing reciprocal tariffs on United States products in order to place pressure on the U.S. government could be part of reaching that deal, Anaya said.

Ruling party candidate José Antonio Meade said in a Twitter message that “Mexico won’t be played around with,” adding that the future of the region depended on respect, trade and understanding.

“. . . We will defend our jobs, our markets and our workers. Today and always,” Meade tweeted.

At an event in Nayarit, he described the government’s response as “clear and forceful.”

Independent candidate Jaime “El Bronco” Rodríguez said there was no need to be afraid about the United States’ decision and that Mexico must respond in the same way.

“. . . Every president should defend his country and here President Peña Nieto should have the support of all Mexicans in that sense . . .” he said.

Source: Milenio (sp), El Financiero (sp), Forbes (sp), Bloomberg (en), La Jornada (sp), Noticieros Televisa (sp)

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