The Steel Manufacturers Association (SMA) and the Metals Service Center Institute (MSCI) held a press conference to highlight the significance of the US-Mexico-Canada (USMCA) trade agreement. SMA President Philip K. Bell described the USMCA as a landmark piece of legislation and expressed hope that all parties involved would continue to uphold its spirit. MSCI President and CEO Bob Weidner emphasized the importance of maintaining a healthy domestic source of supply and demand in North America. The officials also raised concerns about non-market economies exploiting trade rules through Canada and Mexico. Bell stressed the need for transparency and the strengthening of import monitoring systems with Mexico to address allegations of transshipment. Additionally, the article mentions the introduction of the "Stop Mexico's Steel Surge Act" in Congress, which aims to reimpose Section 232 tariffs on Mexico [39dd6dac].
Traders are anticipating increased inspections by the United States on goods from Mexico due to concerns over terrorism. The Mexican Business Council for Foreign Trade, Investment and Technology (Comce) has warned that inspections of goods and human trafficking on Mexico's northern border will be heightened in response to the war between Israel and the terrorist group Hamas. The council's warning comes as Texas Governor Greg Abbott's border-security crackdown has already caused significant delays and congestion at commercial crossings, resulting in 19,000 trucks loaded with $1.9 billion worth of goods being stuck in Mexico. The safety inspections, described as 'absurd,' have led to wait times of up to 24 hours in lines stretching for 23 kilometers (14 miles), severely impacting supply chains. The trucking association has criticized the measure, stating that it hinders regional development and jeopardizes tens of thousands of jobs in Mexico and the US. The association is urging the ministries of Foreign Affairs and Economy to engage in diplomatic channels and dialogue to demand an end to the inspections. The Texas Center for Border and Economic Enterprise Development reported that in 2021, approximately $443 billion worth of electronics, fruit, nuts, and machinery crossed into the US via Texas-Mexico ports of entry. Texas Governor Abbott, a Republican, has made illegal immigration a priority and is seeking to deter illegal border crossings and drug smuggling through increased inspections. Mexican President Lopez Obrador has criticized Abbott's administration for its hostile attitude and has discussed the issue with President Joe Biden. The ongoing border bottleneck has become a major concern for the trucking industry in Texas, as truckers are facing huge delays as they wait for inspections, causing significant disruptions to their operations. The Texas economy, heavily reliant on cross-border trade, is also feeling the impact, with distribution centers and factories struggling to keep up with the delays, leading to supply chain disruptions and financial losses. The situation at the Texas ports of entry is a result of a combination of factors, including the high numbers of daily migrant crossings, which have put additional strain on border resources, leading to increased inspections by the Texas Department of Public Safety. The trucking industry and the Texas economy are closely intertwined, and any disruptions to cross-border trade have far-reaching consequences. It is imperative for the relevant authorities to work together to find solutions that balance security concerns with the smooth flow of goods across the border [57d35702] [bffaf0dc] [5c103519].
The U.S. Department of Commerce shouldn't allow the self-interest of a handful of Florida growers to wreak havoc on the Texas economy. On June 16, 2023, the Florida Tomato Exchange petitioned the U.S. Department of Commerce to terminate the Tomato Suspension Agreement (TSA), a long-standing trade agreement governing imports of fresh tomatoes from Mexico. Terminating the TSA would impose a new 21 percent 'tomato tax' on imported tomatoes from Mexico. Fresh tomatoes imported from Mexico in 2022 added $7.54 billion to the U.S. economy and supported 49,128 American jobs. Texas stands to lose $4.53 billion in economic activity and more than 32,000 jobs if the agreement is terminated. The termination would also lead to an average price increase of 52 percent nationwide. The U.S. Department of Commerce and the U.S. Department of Agriculture have not found Mexico to be in violation of the agreement. Termination of the agreement could prompt Mexico to retaliate with tariffs on U.S. exports. The Biden Administration must consider the harm that would be inflicted on U.S. businesses, workers, and American families if the agreement is terminated [05d15e6c].
US Rep. Vicente Gonzalez warns that the termination of the Tomato Suspension Agreement (TSA) could introduce a 21 percent tariff on Mexican tomatoes, impacting their affordability and availability in the US. This 'tomato tax' could have severe economic repercussions for Texas, risking the loss of $4.53 billion in economic activity and over 32,000 jobs. Gonzalez argues against the termination, highlighting the Biden Administration's efforts to lower costs and the lack of evidence supporting claims of unfair pricing by Mexican producers. He warns of broader economic damage and potential retaliatory tariffs from Mexico [461de61f].
The Tomato Suspension Agreement (TSA) between the US and Mexico may be terminated, introducing a 'tomato tax' that could increase tomato prices by over 50%. Representative Vicente Gonzalez opposes the termination of the TSA, highlighting the importance of the US-Mexico trade relationship for Texas, where over 32,000 jobs are at stake. The termination of the TSA could result in a 21% tariff on Mexican tomatoes, making them a luxury for many American families. Economists estimate that over 32,000 jobs in Texas could be jeopardized. The repercussions of terminating the TSA would extend beyond the Texas-Mexico border, affecting the entire United States. Tomato prices could increase by 52% due to diminished supply, contradicting the Biden Administration's efforts to curb inflation and reduce costs for Americans. Representative Gonzalez warns of potential retaliatory tariffs from Mexico and emphasizes the need for a balanced approach that benefits US businesses, workers, and consumers. The debate over the TSA raises questions about the future of US-Mexico trade relations and the broader economic strategies to support American consumers and workers [39dd6dac].
A 1964 law, known as the Chicken Tax, prevents foreign automakers from selling pickup trucks in the US. The law originated from a tariff war between the US and Europe over chicken imports. The Chicken Tax imposes a 25% tax on various goods imported from Europe, including automobile trucks valued at $1,000 or more. The tax was applied to trucks and vans to protect American automakers and gain union support for President Lyndon B. Johnson's Civil Rights Bill. The Chicken Tax affects vehicles classified as light-duty trucks or vans with a gross vehicle weight rating (GVWR) under 10,000 pounds and produced outside of North America. Many popular trucks from European and Japanese automakers, such as the Toyota Hilux and Volkswagen Amarok, are affected by the Chicken Tax. Manufacturers have found ways to get around the tax, such as opening factories in the US or using loopholes like chassis cabs or classifying vehicles as passenger vehicles. The Chicken Tax remains in effect today and is unlikely to be repealed, as protectionism in the auto industry continues. Tariffs on vehicles built in China or with Chinese parts are also being imposed, further restricting foreign-built pickup trucks in the US [1c229ddd].
Representatives of Mexico, the United States, and Canada will meet in Phoenix, Arizona for the fourth meeting of the USMCA's Free Trade Commission. The meeting will address tensions over increased tariffs, Chinese imports to Mexico, and the Mexican government's ban on genetically modified corn. The US has imposed tariffs on Chinese imports, including electric vehicles, and warned against commercial triangulation through Mexico. The Biden Administration has suggested additional sanctions if Chinese electric vehicle manufacturers move their production to Mexico. Mexico is fighting for a slice of the US market as the United States wants to stop buying from China. The labor conditions of Mexican companies with ties to the United States will also be discussed. Mexico will defend its ban on genetically modified corn, which threatens to block US exports to Mexico. Canada has joined the US in criticizing the ban. Mexico and Canada are the main export destinations for the US, and trade flows in North America reached over $1.8 trillion in 2023 [d575603c].
The US, Canada, and Mexico need to coordinate their trade relationships with China to ensure the effectiveness of the United-States-Mexico-Canada Agreement (USMCA) and reduce exposure to Chinese supply chains. The US has implemented trade and investment restrictions on China, while Canada and Mexico have not. The interconnected nature of USMCA trade allows Chinese exports to enter the US through Mexico and Canada, circumventing US trade restrictions. To de-risk the US's economic relationship with China, a more coordinated approach is needed. The US, Canada, and Mexico should work together to address the gaps in their trade and investment policies towards China. Failure to collaborate risks the US adopting a more go-it-alone approach. The USMCA is crucial for the North American economy, accounting for over $1.8 trillion in annual trade and 17 million jobs. Deepening cooperation among the three countries is necessary to strengthen North America's economic security and competitiveness [3c83cbfc].