This week, Mexico began imposing tariffs on U.S. goods entering the country in response to U.S. tariffs placed on steel and aluminum. The U.S. goods facing tariffs, which range from 20-25%, include steel products, pork, cheese, bourbon, cranberries, and apples. Steel, unlike the other products listed here, is among the top ten exports from the United States to Mexico. Regardless of product ranking, the companies that depend on the Mexican market for additional sales and revenue will be affected by the tariffs going from 0% to 20% or more. Since steel is the top export from this group, today’s blog post will look at how this particular industry and associated companies will be affected.

In 2017, the United States exported US$4.6 billion worth of steel to Mexico, which accounts for two percent of total U.S. export of goods to Mexico. In terms of the share of U.S. export of goods to Mexico, the two percent figure seems insignificant. However, it is important to highlight the companies that will be negatively impacted by these tariffs.

In 2017, six companies have been reported as exporting iron and steel to Mexico from ports in California, Georgia, New York, Philadelphia, and Texas. The volume of these exports reached 264 kg and a value of US$192,000.

These companies will face higher costs of exporting to Mexico. These higher costs will reduce the ability of U.S. steel exporters to compete in the Mexican market. Additionally, the question arises regarding the impact on employment at these same companies. The exporters of the other products included on Mexico’s list of tariffs on U.S. goods will face a similar fate.

In sum, a trade war does not benefit anyone. Retaliatory trade measures taken by the United States’ key trading partners make it even more difficult to offer a solid strategy for U.S. companies looking to expand overseas in an effort to boost exports and narrow the U.S. trade deficit in goods. Nevertheless, GRIIT continues to follow the performance of companies in the current trade climate to assist its clients with developing a reasonable and practical competitive strategy.

 

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