Mexico put tariffs on American products ranging from steel to pork and bourbon on Tuesday, retaliating against import duties on metals imposed by President Donald Trump and taking aim at Republican strongholds ahead of US congressional elections in November.
Mexico's response further raises trade tensions between the two countries and adds a new complication to efforts to renegotiate the NAFTA trade deal between Canada, the United States and Mexico. American pork producers, for whom Mexico is the largest export market, were dismayed by the move.
Trump last week rattled some of the closest US allies by removing an exemption to tariffs on imported steel and aluminium 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, a move that both countries say they oppose.
Following news of the new Mexican tariffs, which take effect immediately, the peso tumbled to its weakest level since February 2017, leading losses among major currencies. Mexico's retaliatory list included a 20-percent tariff on US 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 US steel products will be hit by 25 percent tariffs. Mexico is a net importers of US steel. 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.
The retaliatory tariffs could also have political implications in some hotly contested races as the Republicans seek to maintain control of both chambers in Congress. Pork exporter Iowa, where incumbent Republican Representative Rod Blum is seen as vulnerable in November's election, is an example of a place where Trump's party could be hurt.
Top cheese producing states include California, New York and Wisconsin - home to House of Representatives Speaker Paul Ryan, who is retiring from Congress. Bourbon-producing Kentucky is the home state of Senate Majority Leader Mitch McConnell, a Republican. "This is a gut punch to Virginia farmers, who exported more than $68 million in pork to Mexico last year. The President's trade war is going to cost Virginia ag jobs," US Senator Mark Warner, a Democrat from Virginia, said in a tweet.
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