By Dr. José Roberto Balmori de la Miyar*
The president of the United States, Donald Trump, scored a historic victory in his strategy to impose tariffs on products from foreign companies that seek to access American markets.
This is because it has reached important agreements with many of the world’s largest economies, where imports must pay a tariff, in addition to a series of significant investments in US territory. I say that this victory is historical because, on previous occasions as in 1933, most countries imposed reprisals to the United States, something that did not happen on this occasion.
Among the agreements are 10% tariffs on products from the United Kingdom, 15% to Japanese and South Korean products, 15% to products from the European Union, 19% to Philippine and Indonesian imports, and 20% in Vietnamese products. Most of these agreements include an investment package, such as the 600 million dollars that European companies must invest in US territory during Trump’s mandate or the 550 million dollars that Japan will invest in the United States also during President Trump’s second term.
Likewise, the Mexican government managed to postpone the discussion of tariffs for 90 days, which puts Mexico, together with China, as the only countries that could reach an extension with President Trump. In the case of China, this is because the United States is interested in reaching an agreement to access the rare earths that are in abundance in that country. China is the country with more proven reserves of these elements, with 44 million metric tons. These rare earths are 17 chemical elements such as the Scandio, the ititrium or the lanthanides, which are used as catalysts or for energy and defense applications.
In the case of Mexico, this postponement is due to the fact that the United States seeks an agreement in parallel for shared national security, which covers the fight against drug trafficking and the protection of the border between the two countries. While Mexico has letters to negotiate, without a doubt the baton will be carried by our northern neighbors, given the high economic dependence of Mexico with the American markets. At the same time, a review of the TMEC will come, where Mexico and Canada remain deficit in their trade with the United States.
This new International Trade panorama has begun to generate a different dynamic from the one that was previously seen. On the one hand, Mexico is consolidated as the main commercial partner of the United States instead of China, due to the high tariffs imposed on Chinese products, including those of Minimis (products with a price less than 200 dollars), such as those of Temu or Shein.
On the other hand, there are growth and decreases in the products that Mexico exports to the United States. For example, the computer equipment becomes the new spearhead in Mexican exports to the United States, with double digit growth, while steel derivatives or cars exports lose ground, with annual falls of 20% and 6%, respectively, according to June data. This, again, due to tariffs imposed on Mexico that are outside the TMEC.
Finally, the following months will be very interesting because other economies must give in to Trump’s tariffs, since the agreements have been reached so far cover a substantive part of the goods that the United States matters in the world. We will have to be aware of what happens with the agreements with Canada, China and, of course, Mexico. If negotiation skills are maintained, Mexico, together with the United States, could benefit a lot from this new world homeland.
About the author:
*Dr. José Roberto Balmori de la Miyar He is the Director of the Bachelor’s Programs of the Faculty of Economics and Business of the Universidad Anáhuac Mexico.
Twitter: @jrbalmori
The opinions expressed are only the responsibility of their authors and are completely independent of the position and the editorial line of Forbes Mexico.
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