MNI INTERVIEW: US Tariffs Risk New Alliances- NAFTA Negotiator
MNI (BRASILIA) - U.S. President Donald Trump's tariff threats put pressure on countries like Mexico to seek alternative alliances with regional partners such Brazil, as well as creating new risks for global supply chains that could boost inflation, a former senior Mexican trade negotiator told MNI.
Antonio Ortiz-Mena, a former member of the Mexican government’s NAFTA Negotiation Office of the Ministry of Trade and Industrial Development, said U.S. concerns about trade imbalances are legitimate but the administration's solutions are counterproductive.
"Much of the discussion right now is about the economic costs of tariffs on inflation, growth, employment, and disrupting value chains. I believe that's important, but to me, the most significant consequences are geopolitical and related to commercial alignment," Ortiz-Mena, now CEO of AOM Advisors and professor at Georgetown University, said in an interview.
"These measures could undermine the U.S.’s credibility as a reliable trade partner since they violate international agreements such as the USMCA, which Trump himself negotiated. This could prompt other countries, including Mexico, to seek alternatives, indirectly benefiting China.”
The imposition of tariffs could push up U.S. inflation if the country cannot efficiently replace imports from Mexico and Canada, and could also cause negative shocks to the global economy if a trade war ensues. The U.S. administration sees tariffs as a revenue source to offset tax cuts, which could make them more permanent.
"Mexico and Canada, in turn, could retaliate by targeting Republican states and districts to pressure the U.S. government into negotiating," Ortiz-Mena said.
UNFAIR TRADE
Trump imposed a 25% tariff on Mexico and Canada, along with 10% on goods and services from China, starting in early February, but agreed to put the new levies for Mexico and Canada on hold for a month after negotiations. He also slapped 25% tariffs on all steel and aluminum imports, likely starting in early April, as well as threatened a new regime of reciprocal tariffs.
"Concerns about unfair trade are absolutely legitimate, and China is indeed part of the problem. Trump is pointing out a real issue, but the solution he is seeking, especially by imposing tariffs on Canada and Mexico, is problematic," Ortiz-Mena said.
Trump previously used tariffs to pressure Mexico on migration issues and is now adding fentanyl trafficking as a justification, he noted.
"Trump seeks to impose tariffs not only for political reasons but also due to a unilateral view of fair trade based on trade balance figures.”
Closer cooperation between North American allies, not tariffs, is the right way to address any outstanding issues, said Ortiz-Mena. (See MNI WATCH: Banxico Signals More 50BP Cuts At Coming Meetings)
PARTNERSHIP WITH BRAZIL
He also mentioned that Brazil could take some advantage as Mexico could increase grain imports from South America’s biggest nation to reduce its reliance on the United States. This could strengthen the historically complex relationship between Mexico and Brazil.
"If Mexico and Canada respond by restricting agricultural exports (such as corn, wheat, and pork in the case of Mexico), the U.S. would face difficulties reallocating these products within its own saturated market and protected international markets," Ortiz-Mena said. He pointed out the complexity of agricultural markets and the sanitary barriers and quotas that limit export alternatives.
"In 36 years of experience in international trade, I have never seen so much uncertainty in the global landscape, but new opportunities will also emerge. It is important to understand the ongoing geopolitical realignments and prepare for unprecedented events that may arise," he added.