Let the trade war begin
Following President Trump’s imposed tariffs on international aluminum and steel, the US neighbor is firing back with their own tariffs. Mexico announced on Wednesday that the country would impose a 10% tariff on US pork, which will increase to 20% by early July.
This tariff will significantly impact both US pork farmers and the US economy, as Mexico is the second largest importer of US pork. In fact, domestic pork farmers could lose up to $360 million each year. Additionally, according to government reports, Mexico imported 650,000 metric tons of US pork in 2017, worth roughly $1 billion.
Many Trump supporters favor the rebalance of tariffs to bring more bargaining power to the US. However, this tariff will only hurt American farmers – many of which are Trump’s constituents. The tariffs will reduce profits for these companies and increase prices in Mexico, consequently lowering demand for pork.
President Trump had this to say about the deal:
Farmers have not been doing well for 15 years. Mexico, Canada, China and others have treated them unfairly. By the time I finish trade talks, that will change. Big trade barriers against U.S. farmers, and other businesses, will finally be broken. Massive trade deficits no longer!
US farmers worry about the long-term effects of the tariffs. If the new policy can positively bring up trade discussions and give farmers better bargaining positions, then the industry will be pleased. However, many worry that it will only create a downward spiral for the agriculture industry, forcing many producers out.
Trump’s protectionist policy is controversial, and the benefits will only be seen in the long run, but supporters seem content that the president is addressing trade deficits at all.
Featured image via Pexels/mali maeder