This week, the Mexican government announced it would add to the list of retaliatory duties on U.S. products for America’s refusal to allow Mexican trucks to operate north of the border. This move creates additional tariffs on 26 U.S. products, including pork, oranges, and chewing gum, among other products.
This is the second such retaliation by the Mexican government following passage of the omnibus spending bill in early 2009 which included a provision to end the pilot program to allow Mexican trucks to ship goods deep within U.S. borders, violating our obligations under the North American Free Trade Agreement. Mexico raised tariffs on 90 U.S. agricultural and industrial products, worth more than $2.4 billion in American goods exported to our southern neighbor.
Sadly, since Obama took office such retaliation has become the norm rather than the exception. The stimulus bill included the protectionist “Buy American” provision, forcing manufacturers to give preferential treatment to domestic producers of iron, steel and other manufactured goods in building contracts and other spending. As a result, countries from Europe to Asia signaled their own buy domestic policy aspirations. Additionally, over the past year Brazil has threatened retaliation over a nearly decade long cotton dispute and China has threatened to impose tariffs after the Administration raised prices on imports of Chinese made tires and steel.
Obama’s goal to double U.S. exports is an important and laudable goal but he is proving to be clueless or just plain ignorant in the ways to achieve export growth. Focusing solely on American goods creates a monopoly of sorts within our own borders. When American businesses face no competition from foreign companies, American consumers feel the impact. If Americans stop importing goods from abroad, then foreign nations could also stop importing American products.
Increasing trade by lowering tariffs and subsidies worldwide will provide new markets for American manufacturing and agricultural products and when firms find new customers abroad they are more likely to invest at home leading to new innovations and higher paying jobs. If Obama continues to ignore this reality, America will be faced with higher prices and more job losses.