Mexico answers US tariffs with its own on products including pork bellies, grapes, apples and flat steel.

MEXICO CITY (AP) — Mexico answers US tariffs with its own on products including pork bellies, grapes, apples and flat steel. </s> MEXICO CITY (AP) — Mexico answers US tariffs with its own on products including pork bellies, grapes, apples and flat steel. </s> Mexico answers US tariffs with its own on products including pork bellies, grapes, apples and flat steel. </s> WASHINGTON/PARIS (Reuters) - Canada and Mexico retaliated against the United State’s decision on Thursday to impose tariffs on steel and aluminium imports and the European Union had its own reprisals ready to go, reigniting investor fears of a global trade war.

The tariffs, announced by U.S. Commerce Secretary Wilbur Ross in a telephone briefing on Thursday, ended months of uncertainty about potential exemptions and suggested a hardening of the Trump administration’s approach to trade negotiations.

The measures, touted by President Donald Trump in March, drew condemnation from Republican lawmakers and the country’s main business lobbying group and sent a chill through financial markets.

The Dow Jones Industrial Average .DJI lost 1 percent and the S&P 500 .SPX shed around 0.66 percent. Shares of industrial heavyweights Boeing (BA.N) fell 1.7 percent and Caterpillar (CAT.N) 2.2 percent.

A 25 percent tariff on steel imports and 10 percent tariff on aluminium imports will be imposed on the EU, Canada and Mexico from midnight (0400 GMT on Friday), Ross told reporters.

“We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” he said.

Canada and Mexico, embroiled in talks with the United States to modernize the North American Free Trade Agreement (NAFTA), responded swiftly.

Canada, the largest supplier of steel to the United States, will impose tariffs covering C$16.6 billion ($12.8 billion) on imports from the United States, including whiskey, orange juice, steel, aluminium and other products, Canadian Foreign Minister Chrystia Freeland said.

“The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must,” Prime Minister Justin Trudeau said at a news conference with Freeland.

Mexico announced what it described as “equivalent” measures on a wide range of U.S. farm and industrial products.

The measures, which target pork legs, apples, grapes and cheese as well as steel and other products, will be in place until the U.S. government eliminates its tariffs, Mexico’s Economy Ministry said.

The S&P 500’s packaged foods and meats industry sub-index .SPLRCFOOD fell 2 percent, with shares of meat producer Tyson Foods Inc (TSN.N) falling 4 percent, Campbell Soup Co (CPB.N) 2.5 percent and spice maker McCormick & Co Inc (MKC.N) 3 percent.

The Mexican peso MXN= dropped about 1 percent and the Canadian dollar CAD= shed about 0.6 percent. At its low, the peso was at its weakest against the dollar in nearly 15 months.

The EU threatened tariffs on Harley Davidson motorcycles and bourbon, measures aimed at the political bases of U.S. Republican legislators. Shares of Harley-Davidson Inc (HOG.N) fell 2.17 percent and Brown-Forman Corp (BFb.N), maker of Early Times and other bourbon brands, lost 2.1 percent. EU members have given broad support to a European Commission plan to set duties on 2.8 billion euros ($3.4 billion) of U.S. exports if Washington ends tariff exemptions. EU exports potentially subject to U.S. duties are worth 6.4 billion euros ($7.5 billion).

“It’s entirely up to U.S authorities whether they want to enter into a trade conflict with their biggest partner, Europe,” France’s Finance Minister Bruno Le Maire said after meeting with Ross on Thursday.

U.S. Chamber of Commerce President Tom Donohue warned in a letter seen by Reuters to the body’s board that current trade policies could threaten “economic progress” and cause the loss of more than 2 million jobs, mostly in states that voted for Trump and Republican candidates.

The tariffs are part of Trump’s effort to protect U.S. industry and workers from what he described as unfair international competition, a key theme of his “America First” agenda.

Temporary exemptions were granted to a number of nations and permanent ones to several countries including Australia, Argentina and South Korea. U.S. trading partners had demanded that the exemptions be extended or made permanent.

The tariffs are aimed at allowing the U.S. steel and aluminium industries to increase their capacity utilization rates above 80 percent for the first time in years.

Shares of U.S. Steel Corp (X.N) rose 1.7 percent, but AK Steel (AKS.N) fell 1.3 percent and Steel Dynamics Inc (STLD.O) shed 0.9 percent. Shares of Century Aluminum Co (CENX.O) jumped 3.3 percent but Alcoa Corp (AA.N) shed 0.9 percent.

The U.S. administration also launched a national security investigation last week into car and truck imports, using the same 1962 law it has applied to curb incoming steel and aluminium.

“The Trump administration seems to regard overt threats, including tariffs and repudiation of previous agreements, as a key element for gaining leverage in trade negotiations,” said Eswar Prasad, a former head of the International Monetary Fund’s China division and now a professor at Cornell University.

Prasad warned that the United States was doing so at the cost of alienating key allies and undercutting broad international pressure on China to change its trade and economic practices.

Ross himself heads to Beijing on Friday where he will attempt to get firm deals to export more U.S. goods in a bid to cut America’s $375 billion trade deficit with China.

The Trump administration has demanded that Beijing make concessions and threatened to punish it for allegedly stealing U.S. technology by imposing tariffs on $50 billion of imports from China.

While China is seen at more risk from a trade war as its exports are larger than its imports from the U.S., the operations of American companies in China make substantial sales there, which could be hit by any turn in sentiment. ($1 = 0.8575 euros) </s> MEXICO CITY (Reuters) - Mexico hit back fast on U.S. tariffs on steel and aluminum on Thursday, targeting products from congressional districts that President Donald Trump’s Republican party is fighting to retain in November elections.

FILE PHOTO: U.S. Presidential nomineeDonald Trump walks past a Mexican flag after giving a press conference with Mexico's President Enrique Pena Nieto at the Los Pinos residence in Mexico City, Mexico, August 31, 2016. REUTERS/Henry Romero

Economy Minister Ildefonso Guajardo said the tit-for-tat measures would complicate talks between the United States, Canada and Mexico to revamp the North American Free Trade Agreement (NAFTA) that underpins trade between the neighbors.

The spat meant it would be “very difficult” to reach a deal to revamp NAFTA before Mexico’s July 1 presidential election, though he underlined the continent had not entered a trade war.

“A trade war is when there is an escalation of conflict. In this case, it is simply a response to a first action,” Guajardo told Mexican radio.

“We should stick to the clearly defined battlefield, where the response is appropriate and proportional.”

Mexico’s retaliatory tariffs target pork legs, apples, grapes and cheeses as well as steel - products from U.S. heartland states that supported Trump in the 2016 election.

The country reacted right after Washington said in the morning it was moving ahead with tariffs on aluminum and steel imports from Canada, Mexico and the European Union.

“It sends a clear message that this kind of thing does not benefit anybody,” Guajardo said of the Mexican retaliation.

“Because, in the end, the effect will fall on voters and citizens that live in districts where the people have a voice and vote in the (U.S.) Congress.”

Mexico said it was imposing “equivalent” tariffs, ratcheting up tensions during talks to renegotiate NAFTA ahead of the U.S. mid-term elections in November. The measures will be in place until the U.S. government drops its tariffs, Mexico’s government said.

MEXICO WITH THE WORLD

Guajardo said retaliation was aimed at products chosen to hit districts with important lawmakers who had been warning Trump not to mess with Mexico. He estimated the U.S. tariffs would affect $4 billion in trade between the two countries.

“It is a sad day for international trade,” Guajardo said. “But hey, the decision was made, and we always said that we were going to be ready to react.”

In 2011, Mexico successfully used a similar list of mostly agricultural products to push Washington into letting Mexican truckers on U.S. highways.

Trump’s Republicans are fighting to retain control of Congress in mid-term elections. Their majority in the House of Representatives is seen as vulnerable.

Pork exporter Iowa, where incumbent Republican Rod Blum faces a Democratic challenge, is an example of a place Mexico’s reaction could hurt.

Mexico buys more steel and aluminum from the United States than it sells. It is the top buyer of U.S. aluminum and the second-biggest buyer of U.S. steel, Guajardo’s ministry said.

The countermeasures will hit U.S. hot and cold rolled steel, plated steel and tubes, the ministry said.

Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto spoke by phone after the U.S. announcement. Canada pledged to fight back with its own measures.

Trump threatened to rip up the NAFTA deal during his election campaign but agreed to renegotiate early in his term. Still, since talks began nine months ago, he has repeatedly said he could walk away from NAFTA if it is not redone to his liking.

“The difference between a year and four, five months ago is that it seems the world looked and said ‘poor Mexico,” Guajardo said. “Now, Mexico is facing these threats together with the world.” </s> India will impose higher retaliatory tariffs on 28 U.S. products including almonds, apples and walnuts from Sunday, following Washington's decision to strip the country of preferential access to the American market.

New Delhi initially issued an order in June last year to raise import taxes as high as 120% on a slew of U.S. items, incensed by Washington's refusal to exempt it from higher steel and aluminum tariffs, but repeatedly delayed the decision as the two nations engaged in trade talks. </s> President Donald Trump late Thursday evening said in a tweet that his administration is hitting Mexico with new tariffs over migrants traveling through the country and entering the United States illegally.

Tariffs have become the White House’s preferred method of doing business, and the new duties are aside from the new trade deal, the USMCA, the president struck with Mexico and Canada as a replacement for NAFTA.

The new tariffs will take effect on June 10, and Trump warned that the new levies will gradually increase to as high as 25% by Oct. 1, Trump said in a statement released by the White House.

“On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP,” Trump said via Twitter. “The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed. Details from the White House to follow.”

The new tariffs would have major implications for the U.S. auto industry and all companies who do business south of the border as Trump continues to ramp up trade wars across the globe, the latest news coming just days after his administration removed tariffs on steel coming from Mexico.

The move will come at a cost to both countries. The U.S. accounts for about four-fifths of all of Mexico’s exports, and about 28% of its total GDP, according to Bloomberg.

To the U.S., 5% tariffs on $346 billion worth of goods amounts to about $17 billion, rising to $87 billion if the tariffs hit 25%. U.S. consumers will end up footing the bill and the impact will be felt more directly than say with the tariffs against China, considering the amount of food that comes into the United States from Mexico.

Wall Street did not react well on the news, with the S&P 500 and Dow Jones Industrial both sinking 1.1% in pre-market trading Friday morning, and the Nasdaq down 1.3%. The news also sent the Mexican peso down 3%.

Mexican President Andres Manuel Lopez Obrador posted a letter on Twitter, saying “President Donald Trump in peace” in a tweet accompanying the letter, which is in Spanish.

The letter tells Trump that “social problems are not solved with duties or coercive measures” and alluded to the United States’ history as a nation of immigrants.

“The Statue of Liberty is not an empty symbol,” he wrote. He also said he was dispatching his foreign relations secretary to Washington on Friday to try to negotiate a solution, according to the Associated Press.

The timing is particularly peculiar, with the administration pushing hard to get the new USMCA trade pact finalized in Congress.

“The tariffs certainly put the USMCA on ice,” said Gary Hufbauer, an expert in trade law at the Peterson Institute for International Economics, who panned the move but said Trump does have the legal authority to impose the tariffs under the International Emergency Economic Powers Act by citing a national emergency.

“The drama is legal, but it’s preposterous,” he said.

Daniel Ujczo, a U.S.-based international trade lawyer, said the threat would likely slow the deal’s progress in Mexico and put U.S. lawmakers who want to vote “yes” in a difficult position because companies in their districts — and then ultimately U.S. consumers — will end up paying the tariffs.

Still, Ujczo and others wondered whether Trump would go through with the threat.

“This seems more theater and tactics than a strategy to solve the migration crisis and rebalance North American trade,” Ujczo said.

It wouldn’t be the first time Trump has backed off an immigration threat if that ends up being the case. Trump previously threatened to shut down the entire southern border if Mexico didn’t halt the migrants moving toward the U.S. border. A couple of days later he backed off, saying he was pleased Mexico was taking steps toward stopping the flow of migrants.

Later in the morning, Trump tweeted again on the issue, putting the onus on Democrats because “they want Open Borders.”

The Associated Press contributed to this report.

Editor’s note: Is this the right move or an empty threat? Are things getting out of control with the tariffs, driving up costs for U.S. consumers, or do the ends justify the means to stop the flow of illegal immigrants? Perhaps a … border wall? Share your thoughts below. </s> Image copyright Getty Images Image caption US pork products are among those affected by new tariffs imposed by China

The White House has criticised China after it imposed retaliatory tariffs against the US on a range of goods, including pork and wine.

Beijing put duties of up to 25% on 128 American imports following President Donald Trump's decision to slap taxes on imports of steel and aluminium.

China said the move was intended to safeguard its interests and balance losses caused by the new tariffs.

US stocks fell sharply and Asia traded generally lower, amid trade war fears.

On Wall Street, the S&P 500 Index lost 2.2%, while the Dow Jones Industrial Average dropped 1.9%.

In Asia, Japan's Nikkei 225 opened down about 1.5% on Tuesday but recovered a little to close 0.45% lower. The Shanghai Composite closed down even further, dropping 0.84%, although Hong Kong's Hang Seng bucked the trend, reversing earlier losses to finish up 0.29%.

The White House reacted angrily to China's move.

"Instead of targeting fairly traded US exports, China needs to stop its unfair trading practices which are harming US national security and distorting global markets," spokeswoman Lindsay Walters said.

She added; "China's subsidisation and continued overcapacity is the root cause of the steel crises,"

The back-and-forth reflects rising tensions between the US and China, which President Trump has described as an "economic enemy".

What is this fight about?

The US has taken two major steps on tariffs recently that have triggered tension with China, the first on steel and aluminium and the second on intellectual property.

The global steel and aluminium tariffs were announced on 8 March. The US is using national security laws to impose the tariffs, which it says are needed to protect US producers.

Certain allies such as Canada, Mexico and the European Union are in line for exemptions, pending talks.

Image copyright EPA Image caption Donald Trump has vowed to cut the US trade deficit with China

China has challenged the US use of national security laws and announced retaliatory tariffs on $3bn (£2.1bn) worth of US products.

Those tariffs went into effect on Monday, targeting US goods including frozen pork, nuts, fresh and dried fruit, ginseng and wine.

The US tariffs related to intellectual property are expected to be set out this week.

They stem from a US investigation into the alleged theft of intellectual property and Beijing's "Made in China 2025" programme, which the US says puts its firms at a disadvantage and unfairly pressures them to share technology, especially in fields such as robotics and telecommunications.

Up to $60bn in tariffs could be imposed on Chinese imports.

China's ambassador to the US, Cui Tiankai, warned Beijing would take counter-measures of "the same proportion".

Who will blink first?

By Stephen McDonell, BBC News, Hong Kong

China's theft of foreign intellectual property is what sparked all this in the first place, according to Washington. If international companies want to operate in China they must hand over their intellectual property for the privilege, thus delivering the likes of German high-speed rail technology into the hands of Chinese engineers.

Yet now that China's retaliatory tariffs have kicked in, there are also those sympathetic with that argument who are worried that launching a potential tariff war is not the way to fix the problem. Naturally others say China has been getting away with this for years and tough measures were needed in order to force change.

There is also the overall imbalance in US-China trade but a large Chinese surplus, of course, means it is potentially much more exposed during a trade war than America. For this reason Beijing will want to negotiate a way out of this escalating tariff showdown.

Its first set of tariffs are relatively mild but they come in response to the first round of US tariffs and a second has already been announced. There are plenty more American companies to be hit and other nations, especially those in Europe and Asia, could soon find themselves dragged into this conflict.

How have producers reacted?

American businesses caught up in the dispute have raised alarms, noting that China is a large market for certain goods, including pork, soya beans and aircraft.

For example, last year China was the third largest market for US pork, receiving about $1.1bn worth of products, according to the National Pork Producer Council.

"Any restriction on export markets is not a good development for US pork producers," Jim Monroe, a spokesman for the National Pork Producers Council, told the BBC.

US companies have said that while they share some of the Trump administration's concerns, they are worried that threatening tariffs is not the best way to resolve the problems.

"The direction of what the US government is doing, and that is to apply some pressure, use some leverage, to level the playing field is the right one, although I don't think tariffs is the best way to go," said William Zarit. chairman of the American Chamber of Commerce in China.

Mr Zarit told the BBC that members of his organisation, which represents more than 900 companies operating across China, including Intel, Dell, Honeywell and Coca-Cola, were encouraged to hear that top officials have started talking again.

"I think it shows that both sides want to solve this before it gets out of hand," he said. </s> China is moving forward with retaliatory tariffs on U.S. products, including the 25 percent tariff on U.S. pork. China’s Ministry of Finance announced Sunday it will suspend duty reductions on select imported goods from the United States.

In the announcement, China says the Trump administration’s steel and aluminum imports to the U.S. violate World Trade Organization rules, and “did not comply with the security exceptions provision.” China alleges the move by trump caused “serious damage” to China’s interests. China is targeting U.S. items, including fruits, along with the 25 percent tariff on U.S. pork.

China says the nation is using its action as a method to “safeguard its interest,” as allowed by WTO rules. Last week, China’s Ministry of Finance said the action by the U.S. had “severely damaged” the multilateral trade system. China also made a World Trade Organization filing last week to seek consultations regarding the issue.
Mexico retaliates with equivalent levies on pork legs, apples, grapes, cheeses and steel. The Secretariat of Economy says that the measures will be in place until the U.S. eliminates their new tariffs.