The "Obama Tariff"

Our "boy genius" tried to implement a union payback by canceling an existing NAFTA program and got it thrown right back in his face...

March 18, 2009

By Mica Rosenberg

MEXICO CITY (Reuters) - Mexico said on Wednesday it was imposing higher tariffs totaling $2.4 billion on a wide list of U.S. imports ranging from strawberries to Christmas trees after Washington banned Mexican trucks from U.S. roads.

The official government gazette said the new tariffs, which will range from 10 percent to 45 percent, will be effective on Thursday.

Mexico said the U.S. ban on its trucks violates the North American Free Trade Agreement, or NAFTA, and in retaliation published a list of dozens of products subject to tariffs.

To avoid raising prices for local consumers, the Mexican government excluded major staples like rice, corn, wheat and meat products and instead focused on imports that could affect as many U.S. states as possible without hurting Mexican manufacturers.

The list of 90 imports, estimated by the Mexican government to be worth $2.4 billion a year, included sunglasses, toilet paper, pet food, ornaments, soy sauce, Christmas trees and produce such as strawberries, pears and onions.

"One of the very difficult issues that any government has in this highly integrated global economy is to come up with a retaliatory list that doesn't end up doing more damage to a home country's interest as opposed to a foreign country," said Jon Huenemann, a former U.S. Trade Representative official.

Mexico's economy minister said authorities were working to resolve the dispute as quickly as possible.

Mexico, the United States' No. 3 trade partner, is angry the U.S. Congress scrapped a pilot program this month that allowed Mexican trucks to haul goods deep into the United States.
Some U.S. lawmakers and truck driver unions say Mexican trucks do not meet U.S. safety standards, a charge Mexico denies.

Mexico said it imposed the sanctions according to NAFTA rules since the two countries have not been able to resolve the dispute simmering since 2001.

Only about 1.5 percent of U.S. exports to Mexico are affected by the new rules but trade experts say the flap will be the first real test of President Barack Obama's trade strategy.

Obama's first two choices to be commerce secretary, New Mexico Governor Bill Richardson and New Hampshire Senator Judd Gregg, both withdrew their nominations. The Senate Commerce Committee currently is considering his third choice, former Washington governor Gary Locke.
(For details of the full list of U.S. goods facing tariffs, please see pages 50 and 51 of the following document: dof.gob.mx/PDF/180309-MAT.pdf)