Mexico, much like the European Union, is being very clever in fashioning its retaliatory tariffs in response to President Trump’s steel and aluminum tariffs imposed on them. The tariffs Mexico is proposing are targeted to do the most political damage to areas of the country where Republican candidates are vulnerable in the upcoming midterm elections, sending a clear signal that the Republican congressional majority shares the blame for allowing Trump to proceed unfettered with his unilateral, protectionist trade strategies.
According to Reuters:
Mexican tariffs are roiling U.S. congressional campaigns in states where U.S. exporters could take a hit and President Donald Trump’s Republicans face tough races in November congressional elections. Mexico announced the levies this week in retaliation to Trump’s decision to slap tariffs on metal imports from Mexico and other countries. They fall on only about $3 billion in U.S. exports, but were crafted to have a “very specific” focus on vulnerable Republicans, said one senior Mexican official who asked not to be named. “We wanted to ensure that the issue is a top priority for key decision makers at the highest level,” said another Mexican official who requested anonymity.
So, for instance, Mexico is imposing tariffs on pork from the United States. Iowa, the largest pork producer in the United States, with 7 times as many pigs as humans within its borders, is already reeling under the impact of Chinese retaliatory tariffs on pork. Not coincidentally, both of Iowa’s senators and three of its four representatives are Republicans – that is why Iowa pork is a target of retaliatory tariffs. Mexico has also now placed a 20% tariff on fresh apples, which are grown in Washington state’s 8th district, among other places. In that district, the Republican incumbent is retiring and the tariffs are giving strength to the Democratic candidate’s chances.
According to Reuters:
Apples are grown in Washington’s 8th congressional district, where U.S. Representative Dave Reichert, a Republican, is retiring. Mexico slapped a 20 percent tax on fresh U.S. apples, and Democratic candidate Kim Schrier hammered her Republican opponent, saying the local economy will suffer. Apples are one of 71 U.S. products targeted by Mexico, which is also in talks with the United States and Canada to renegotiate the North American Free Trade Agreement. Last year, Washington state exported $126 million in fresh apples to Mexico, paying zero tariffs thanks to the NAFTA agreement. “I hold Republican opponent Dino Rossi accountable for President Trump’s dangerous policies,” said Schrier.
It seems as if President Trump expected that other countries would just accept his tariffs without retaliating and he believed he could use threats of tariffs to get NAFTA renegotiations with Canada and Mexico to swing heavily in his favor. So far Trump seems to be absolutely wrong in his assumptions.
An interesting way to look at it is that it appears that whatever Trump now does, he is apt to lose. If he doesn’t back down about the tariffs, it will give a boost to Democratic candidates and harm Republican candidates, a loss for Trump’s party. If Trump does back down about the tariffs, it would stop the harm to farmers, manufacturers, U.S. consumers and the U.S. economy caused by a trade way, which would be a win for a lot of people, but a tacit admission by Trump that he was wrong, which would be a loss for him.