Mexico adopts retaliation against the U.S. for tariffs on Mexican steel and aluminum

On June 5th, 2018, the Mexican authorities published, in the Official Gazette of the Federation (DOF), the retaliatory measures that Mexico is adopting against various goods originating in the United States. This action was taken in response to the Trump administration’s decision, on May 31st, to establish tariffs on imports of certain Mexican steel and aluminum products.

In accordance with the decree published on June 5th, the countermeasures will only apply to definitive imports (not temporary), including those made under the Sectoral Promotion Programs (PROSECs), as well as those made in the northern border region and strip.

The increase of tariffs will not be applicable to the goods that are extracted from the national territory that were under some program of refund or deferral of tariffs in the cases foreseen in the article 63-A of the Customs Law.

Reprisals announced by the Ministry of Economy are effective as of June 5, 2018.

Key facts of the commercial retaliation applied by Mexico:

  • Goods from the United States, affected by retaliation, are classified in 71 tariff codes of the Mexican tariff.
  • The affected products are the following:
    • Agricultural sector
      • Boneless, fresh or frozen pork products, such as:?Hams and pieces; legs; pallets and pieces. In the case of legs, paddles and pieces, a unilateral tariff-quota is established to import duty-free up to 350 thousand tons per year.
      • Cheese such as:?Fresh, grated or powdered, Grana or parmegiano-regiano, Danbo, Edam, Fontal, Fontina, Fynbo, Gouda, Havarti, Maribo, Samsoe, Esrom, Italic, Kernhem
      • Apples, potatoes, cranberries
      • Whiskey “Tennessee” or “Bourbon”
    • Steel sector
    • Hot rolled flat without alloy; plates; cold rolled, non-alloyed; steels with carbon content greater than 0.4%; steels whose limit of resistance to deformation is equal to or greater than 355 MPa; laminated or coated, including tin; galvanized sheet; laminates coated with aluminum and zinc alloys; strapping cold rolled sheets; wire without alloy; corrugated rods; profiles in L, H and T; laminated to magnetic silicon; galvanized
    • Other industrial goods
      • Drilling pipes
      • Household items for scouring, polishing or similar uses
      • Fans
      • Motor boats, except outboard
      • Metal furniture
      • Lamps and lighting equipment
  • In 2017, the definitive Mexican imports of goods subject to retaliation, coming from the U.S., exceeded 3,000 million USD.
  • The approximate value of the Mexican retaliation is US$650 million.
  • The tariffs that Mexico applies to the United States under the reprisal, range between 7% and 25%.
  • On average, 60% of Mexican imports of the affected goods come from the USA.
  • 28% of imports of the affected goods originate in other countries with free trade agreements signed by Mexico; and, 12% are from countries with which Mexico has not signed commercial agreements.

The commercial reprisal impacts American products that are sent to Mexico from different States of the American Union. Among the states that could be most affected include: Texas, California, Alabama, Illinois, Michigan, Colorado, Washington, Ohio, Arizona, Iowa, Florida, Wisconsin, South Dakota, North Carolina and Kansas.