Mexico is considering heavy tariffs on US corn and soy

While staring down the barrel of potential tariffs on autos being levied by the Trump administration, the Mexicans are considering their options.

One of those happens to be a retaliatory tariff on American grown soybeans and corn.

Mexico has been researching other suppliers from which to purchase these goods as well in order to dampen any negative impact on the Mexican economy that these tariffs might pose.

Interestingly enough, these are goods which are primarily grown in states that voted overwhelmingly for Donald Trump in the 2016 presidential election, so that they will first hand experience the outcome of Trump’s trade policies should the trade war continue on its path of escalation.

Gulf Times reports:

Mexico could strike at $4bn in annual imports of US corn and soybeans if President Donald Trump escalates a trade spat with new tariffs, officials said this week, and it is studying how to reduce the pain of such a move.

Earlier this month, Mexico swiftly retaliated when Trump imposed metals tariffs, hitting dozens of American imports including steel and apples. But it held back from the most lucrative class of US farm products: grains, especially feed corn and soybeans, used to fatten Mexico’s cattle.

Imposing such tariffs would be a last-ditch option hitting at US corn farmers’ top export market, and such a move would hurt Mexico’s own industry.

But it has already been increasing its imports of grains from suppliers like Brazil and Argentina that could enable it to lessen the impact.

“This issue is one for phase two,” said Bosco de la Vega, who heads Mexico’s main agricultural lobby, the National Farm Council.

He said tariffs on grains were discussed at a June 4 meeting he attended at Mexico’s economy ministry, which is in charge of trade. Economy Minister Ildefonso Guajardo was present at the meeting, he said.

“Intentionally, it was left for a major crisis phase,” said de la Vega. He said any move against grains would aim at the US corn belt, mentioning states such as Missouri, Kansas, Iowa and Nebraska, all of which voted for Trump in the 2016 election.

Raul Urteaga, director of international trade for Mexico’s agriculture ministry, said Mexico “right now” was not targeting US grains, but declined to rule out such a move in the future and said Mexico was looking for alternative suppliers.

An official with Mexico’s economy ministry would not say whether or not officials were studying duties on US grains, and referred back to the retaliatory tariffs announced earlier this month.

The decision not to impose the measure during that retaliation was taken to retain options at the negotiating table as trade talks continue and to avoid hurting the Mexican consumer with higher prices, a trade source familiar with the matter said.

High on Mexico’s list of worries is Trump’s decision to launch a national security investigation into tariffs on auto imports, which could hammer Mexico’s $67bn auto industry.

“That’s why we’re preparing,” de la Vega said.

Urteaga, one of Mexico’s original North American Free Trade Agreement negotiators in the early 1990s, cited two trade missions he organised along with 17 Mexican grains buyers to Brazil and Argentina last year, aimed squarely at developing substitute US suppliers.

“I want to emphasise that both yellow corn and soybeans represent very interesting areas of opportunity for Argentina and Brazil as alternative suppliers for us,” he said.

Mexico has also been at odds with the Trump administration over the Donald’s immigration policies, his famed border wall, as well as his threats of withdrawing from the North American Free Trade Agreement (NAFTA).