On Trucks, Tariffs and Trade Wars — and Congrats, Ron Kirk!

By March 19, 2009Trade

The Oregonian, “Mexico’s new tariffs could cost Oregon millions

Mexico, angered by a ban on its trucks entering the United States, slapped tariffs on 90 U.S. products — a move effective today that could cost Oregon exporters tens of millions of dollars.

The duties include 20 percent tariffs on Christmas trees, pears and frozen potatoes, all of which Oregon sells to Mexico. A Mexican official confirmed his government chose the $2.4 billion worth of products partly to target states with powerful Democratic politicians….[snip]

“The vote was to save jobs for the unions, but it’s going to cause problems for several other industries,” said Bill Brewer, executive director of the Oregon Potato Commission.

He said the United States could lose its entire $80 million in annual french-fry exports to Mexico, for example, because Canadian competitors won’t have to pay $16 million in tariffs.

Exports of fresh grapes get hit the hardest (45 percent), and as the Oregonian reports, the focus is on agricultural products. But there are still plenty of manufactured goods that will suffer from the new tariffs. As Bloomberg reports, Procter & Gamble is assessing the impact on its household products like shampoos and deodorants.

The National Association of Manufacturers in Washington sent a note to members asking them to identify any impact.

“We need our members’ input to know how you will be affected by these new tariffs,” the memo said. “The NAM will be working with the administration and Congress to try to resolve this dispute quickly.”

All this said, it would be a mistake to say a trade war is here or on its way. Many trade observers say Mexico was relatively restrained, and the Obama Administration has been conciliatory on the Mexican truck issue, saying they want to work with the Mexican government to resolve the conflict. President Obama is apparently traveling to Mexico next month (CNN reports), which is an important diplomatic gesture.

So welcome to the post of U.S. Trade Representative, Ambassador Ron Kirk. The former mayor of Dallas has many things to work on.

Dallas Morning News, “Kirk easily confirmed as trade rep, now faces pressing challenges“:

We all know this must be solved,” said Sen. Kay Bailey Hutchison, R-Texas, who strongly supported the nomination. “I will say that the person who understands it best is Ron Kirk. He lives in Texas. He knows how important free trade is with Mexico.”

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