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Mexico Scores Trade Sanctions Against the Hard-Talking Trump Administration

— April 26, 2017

Amidst talk of a border wall and trade war, the Mexican government scored a small victory by way of economic sanctions against the hard-talking Trump administration.

For nearly a decade, the United States curtailed imports of tuna from its southern neighbor. American officials wanted Mexico to comply with domestic tuna fishing standards, which ensure catches are “dolphin safe.” Under the provision, fishermen must comply with certain regulations and follow practices which reduce the risk of mixing aquatic mammal meat with other marine produce.

The rule put a heavy dent in the Mexican tuna trade, even after the government said catches were dolphin-free. America opted not to lift the restriction on imports; Mexico retaliated by filing a case against Washington with the World Trade Organization.

Arguing that Mexican fishermen had changed their tactics but were still denied the opportunity to thrive, representatives claimed a nearly half-billion dollars in revenue went up in smoke. They asked the WTO to grant Mexico the right to impose $472.3 million in trade sanctions against the United States.

On Tuesday, the World Trade Organization ruled in favor of Mexico. The victory is largely symbolic – the United States receives 80% of the country’s exports and supplies roughly half its imports. Conversely, America does just over a tenth of its total trade with Mexico.

The WTO also reduced the amount of permissible sanctions, cutting the requested $472.3 million down by nearly two-thirds to $163 million.

Patrick Gillespie of CNNMoney says that “[…] the timing, however coincidental, is sensitive. President Trump wants to renegotiate NAFTA, the fair trade agreement between the US, Mexico and Canada.”

A day before the WTO’s ruling on Tuesday, Trump moved against Canada. The president, in conjunction with the Commerce Department, announced that a new 20% tariff is to be levied on imports of Canadian softwood lumber. He said Canada is “dumping cheap lumber” into the American market at subsidized and unbeatable prices.

“We have massive trade deficits,” Trump told reporters. “So when we’re the country with deficits, we have no fear.”

Canada, in turn, balked at the timber-rattling rhetoric of President Trump. Canada’s Foreign Minister, Chrystia Freeland, told CNN that that Ottawa intends to “play hard.” She hinted that Canada has challenged lumber tariffs and import regulations in the past and came out on top every time.

Gillespie noted in another CNNMoney article that increased lumber tariffs are following a failed Trumpian endeavor to reduce Canada’s sky-high 300% tariff on American dairy products.

Neither dairy nor lumber account for more than one or two percent of each country’s total exports to its neighbor, respectively.

While Freeland’s response to the log-jam was riddled with light humor about Canada’s famed politeness and hockey prowess, the trade-based tensions between the U.S. and Canada and the U.S. and Mexico come at a pivotal and sensitive time in the Trump presidency.

Having failed so far to secure border wall funding, repeal Obamacare, and block Muslim immigration to the United States, President Trump is likely hoping to leverage American economic strength into better trade deals.

Between tough talk about toppling Canadian timber and freshly-netted revenge for Mexican fishermen, any hypothetical trade war to be waged by Trump isn’t off to a fiery start.


Canada foreign minister on Trump tariffs: ‘We’re going to play hard’

Top Trading Partners – December 2013

The US just lost a trade battle with Mexico

WTO lets Mexico slap trade sanctions on U.S. in tuna dispute

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