(Bloomberg) -- Mexico will begin to tax a range of U.S. products in retaliation for tariffs on Mexican steel and aluminum that President Donald Trump announced last week.
The country will slap tariffs of 25 percent on certain cheese products, steel and Tennessee whiskey while imposing taxes of 20 percent on pork, apples and potatoes, according to a resolution published in the Official Gazette early Tuesday.
According to the National Pork Producers Council (NPPC), 25 percent of all U.S. pork shipments go to Mexico. "A 20 percent tariff eliminates our ability to compete effectively in Mexico," said NPPC President Jim Heimerl, who is also an Ohio pork producer. "This is devastating to my family and pork producing families across the United States."
While other World Trade Organization members are also considering retaliating by targeting iconic American products -- such as bourbon whiskey and Harley-Davidson motorcycles -- the escalating tensions between Mexico and the U.S. may further complicate the renegotiation of the Nafta trade accord.
The peso sank to its weakest in more than a year earlier today on concern the U.S. may leave the North America Free Trade Agreement and try to negotiate two separate free trade deals with Mexico and Canada.
Mexico said on Monday that it will complain to the WTO over the U.S. measures, saying that it violates the organization’s agreement on safeguards by not having been adopted in accordance with the procedures provided, in addition to violating the General Agreement on Tariffs and Trade. The U.S. tariffs have been condemned by nations across the world, with Canada last week announcing it will impose tariffs on as much as C$16.6 billion ($12.8 billion) of U.S. steel, aluminum and other products from July 1.
The U.S. last week said it’s levying the new metals duties on imports from the nations and the European Union on national security grounds, ending their temporary exemptions.
The Mexican currency slid for a fourth day on Tuesday, dropping 1.4 percent to 20.3488 in morning trading in New York, the sharpest retreat among major currencies. The nation’s peso-denominated bonds due in June 2027 fell for a seventh day, driving yields three basis points higher to 7.89 percent.
The peso turned lower after White House National Economic Council Director Larry Kudlow said President Donald Trump was "seriously considering"splitting North American Free Trade Agreement talks into separate processes for Mexico and Canada.
Mexico is set to elect its next president on July 1 and Andres Manuel Lopez Obrador, a leftist firebrand who has argued for more reliance on domestic production, is firmly in the lead with a margin of as much as 20 percentage points, according to the Bloomberg Poll Tracker.
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Editor's Note: Additional comments from NPPC added