Concerns Raised Over Tariff Violation and Potential Retaliation
Chihuahua.- Business leaders have warned that the application of a 50% tariff on the importation of white corn violates the United States-Mexico-Canada Agreement (USMCA) and poses the risk of retaliatory measures from the United States. This move could have a significant impact on one of the country’s most important sectors.
Treaty Violation and Tension Escalation
Arturo González Ruiz, the president of the State Agricultural Council of Chihuahua (CEACh), emphasized that the imposition of this tariff goes against the provisions of the T-MEC, the trade agreement between Mexico, the United States, and Canada. This violation could further exacerbate the existing tension caused by restrictions on the importation of yellow corn.
Mexico’s Self-Sufficiency in White Corn
González Ruiz clarified that Mexico produces enough white corn to meet its own demands, resulting in minimal imports of this type of corn. Therefore, the 50% tariff on white corn imports is seen as unnecessary and contradictory to the trade agreement.
A Message of Inconsistency
Federico Baeza Mares, the president of the Business Coordinating Council (CCE), expressed concern that this decree sends a negative message to Mexico’s trading partners, particularly the United States and Canada. The imposition of the tariff breaks previous agreements and creates a potential problem between the partner countries.
Legal Actions and Disapproval
Baeza Mares stated that legal actions will be taken against this measure. He also disapproved of the fact that the presidential decree was published in the Official Gazette of the Federation during nighttime, suggesting a lack of transparency.
Insignificant Benefits and High Risks
Salvador Carrejo Orozco, the president of the Employers’ Confederation of the Mexican Republic (Coparmex), argued that the actual benefits for the country resulting from this measure are insignificant. However, it does pose a high risk of the United States imposing retaliatory tariffs that could negatively impact Mexico’s interests.
Questioning Hostile Signals
Carrejo Orozco questioned the rationale behind sending a hostile signal when the benefits are minimal. He emphasized the potential risk of the United States imposing similar measures that could harm Mexico’s interests. He also noted that these signs of radicalization and ideological decision-making were predicted during President Andrés Manuel López Obrador’s last year in office.
Temporary Modification for National Production
The Official Gazette of the Federation stated that the modification of the tariff on white corn imports aims to promote national production, stabilize prices, and support the domestic market and supply chain. The importance of white corn in determining the prices of various consumer products made from it was highlighted.
According to data from the federal government, Mexico imported 658 thousand tons of white corn in 2022, with 88% of these imports coming from the United States.
Council of Chihuahua (CCE), believes that the imposition of the 50% tariff sends a message of inconsistency to the United States, which could lead to retaliatory measures. This could have a detrimental impact on the Mexican economy, especially the agricultural sector, which heavily relies on exports to the US.
Potential Consequences for the Agricultural Sector
The implementation of the tariff on white corn imports could disrupt the supply chain and affect the competitiveness of Mexican corn producers. This could lead to a decrease in demand for Mexican agricultural products and a loss of market share in the US. Additionally, the potential for retaliatory measures from the US could further harm the Mexican agricultural sector.
The concerns raised by business leaders highlight the potential negative impact of the tariff violation and the importance of resolving this issue to ensure the stability and growth of the Mexican economy.
How could the imposition of the 50% tariff on white corn imports affect the competitiveness of Mexican corn producers and the demand for Mexican agricultural products in the US?
The imposition of a 50% tariff on white corn imports could have several effects on the competitiveness of Mexican corn producers and the demand for Mexican agricultural products in the US:
1. Increased competitiveness for Mexican corn producers: With a tariff on white corn imports, the price of imported corn would rise significantly, making Mexican white corn comparatively cheaper. This could result in increased competitiveness for Mexican corn producers, as they would be able to sell their product at a lower price.
2. Increased demand for Mexican corn: As a result of the cheaper price, the demand for Mexican corn in the US could potentially increase. Domestic corn buyers may prefer to purchase Mexican white corn due to its lower cost, leading to a higher demand for Mexican agricultural products.
3. Reduced demand for US corn: Conversely, the imposition of a tariff on white corn imports could negatively impact the demand for US corn. If Mexican white corn becomes cheaper due to the tariff, US buyers may opt for the imported product instead of domestic corn, reducing the demand for locally-produced agricultural products.
4. Trade retaliation: It’s important to consider that imposing tariffs can lead to trade retaliation. If Mexico decides to retaliate by placing tariffs on US agricultural products, it could greatly affect the demand for US agricultural goods in the Mexican market. This could further complicate the competitiveness of both Mexican and US corn producers.
Overall, the imposition of a 50% tariff on white corn imports could potentially benefit Mexican corn producers by increasing their competitiveness and demand in the US market. However, potential trade retaliation and reduced demand for US corn could have negative consequences for the overall trade relationship between the two countries.