Mexico’s New Tariffs

The ongoing refusal of the U.S. government to honor the terms of the North American Free Trade Agreement is about to claim some new, and as yet unknown, victims.

Sources tell Transport Topics that the Mexican government is about to shift its punitive tariffs to a new list of goods as the first anniversary of the penalties is reached. (Click here for p. 1 story from this week’s issue.)

It was in March 2009 when the Mexican government imposed tariffs on $2.4 billion worth of U.S.-made products. Those levies effectively destroyed some long-standing U.S.-Mexican business for about 90 products, led by frozen processed potatoes.

The tariffs make U.S. goods more expensive, and much of the business was shifted to Canadian suppliers. That meant the U.S. fleets that formerly handled the freight also lost out.

The Mexicans moved after the United States again failed to live up to the terms of NAFTA, which was signed during the Clinton administration and called for the border to be opened to trucking companies from Canada, the United States and Mexico.

The United States has dragged its feet in opening the border, in large part because of the pressure exerted by organized labor under the guise of safety.

Instead of working to ensure that Mexican trucks operating in the United States meet our safety standards, politicians have chosen to keep the border closed, making domestic companies vulnerable to retaliatory action such as the tariffs Mexico has imposed.

These tariffs have had a market effect on such fleets as C.R. England, which saw its loads of frozen processed potatoes to Mexico cut by about one-third and its revenue for those loads cut almost in half. In total, we were told that U.S. frozen-potato export revenue to Mexico was cut by 50% as a result of the tariffs.

Now, our sources said last week, the Mexicans will shift the tariffs to an entirely new list of products in their efforts to wreak the maximum havoc out of the levies.

We were unable to obtain the list of new products that would be affected, but no doubt we will hear from our neighbors in the days to come.

While the Obama administration recently has been talking about restarting the pilot project at the border that Congress shut down two years ago, there are indications the Mexicans may insist on a full border opening before they remove the tariffs.

It’s time to resolve this lingering dispute. It’s time to open the border to safe, responsible Mexican carriers as agreed upon under NAFTA.