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Rick Crawford Representing Arkansas' First District
U.S. Congressman Rick Crawford Representing Arkansas' First District

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Arkansas to suffer in Mexico trade war, ex-envoys say

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Washington, June 5, 2019
Arkansas to suffer in Mexico trade war, ex-envoys say

Written by: Frank Lockwood
Published by: Arkansas Democrat-Gazette

WASHINGTON -- A new trade war with Mexico would have negative consequences in Arkansas, former U.S. Ambassador Earl Anthony Wayne said Monday.

The new trade barriers would threaten not only the economy but could also derail the United States-Mexico-Canada Agreement, he said, referring to a proposed trade deal among the three North American countries.

 

Tariffs on the nation's southern neighbor will affect U.S. businesses as well as consumers, he said.

"Walmart will feel the impact of this. It's already feeling the impact with the China tariffs," he told a Washington, D.C., audience.

Purchasers of Mexican-grown produce will face higher prices. Assuming that Mexico responds with retaliatory tariffs, purchasers of Arkansas farm products will also be affected, he noted.

On Capitol Hill, members of the Arkansas congressional delegation also expressed concerns about escalating trade tensions.

Mexico was Arkansas' second-largest market, behind Canada, in 2018, according to the Office of the U.S. Trade Representative. Of the state's $6.5 billion in exported goods, $870 million went there.

Overall, Mexico was this country's third-largest trade partner in 2018, according to the U.S. Census Bureau. This year, with the U.S.-China trade war escalating, Mexico has been the U.S.' largest trade partner, panelists noted.

Arturo Sarukhan, the former Mexican ambassador to the U.S., predicted trouble if President Donald Trump proceeds.

"It's going to have a profound impact on the economies of both countries and on jobs in both countries," he said.

Both men spoke on a panel titled "Trump, Tariffs and U.S.-Mexico Relations: Finding a Path Forward." It was organized by the Mexico Institute of The Wilson Center, a think tank that analyzes international relations.

Mexico reported deporting 112,317 migrants in 2018 -- most of them from Central America.

The White House, alleging that Mexico is not doing enough to help stem the flow of migrants, has threatened to retaliate by imposing tariffs -- 5% initially, though the figure could rise as high as 25%.

Sarukhan, Mexico's ambassador from 2007 to 2013, said it's likely that Trump will move forward with the 5% tariff "as a means to pressure the Mexican government" with the threat of higher tariffs looming during subsequent negotiations.

How Mexico would respond is unclear.

 

"If you're Mexico, are you going to accept policymaking by tirade and ultimatums?" he asked.

Another Mexican panelist, former governor and congressman Carlos Heredia, also portrayed Trump's threat as a bargaining tactic.

"He likes conflict. He likes to create problems and then pressure the opponent and humiliate the opponent and keep the threat lingering," he said.

Trump's tactics could backfire, panelists said.

"It's going to affect public attitudes [in Mexico]," Wayne warned.

Views of the U.S. have already grown more negative as Trump has intensified his attacks, panelists said, pointing to recent polling.

Trump's trade threats could cause the USMCA to unravel, they warned. The trade agreement, sometimes referred to as NAFTA 2.0, must be ratified by all three governments. 

With Canadian federal elections scheduled for later this year and a U.S. presidential election looming in 2020, the trade deal could be stuck in limbo for quite some time, they added.

In a telephone interview, Arkansas Farm Bureau President Randy Veach stressed the importance of Arkansas exporting its products to Mexico and Canada.

"That's two of our largest trading partners in agriculture and we certainly can't afford to lose those markets," he said.

If the U.S. places tariffs on Mexico, "It will have a really drastic impact on the farmers in Arkansas," he added.

At a time when Arkansas farmers are struggling, uncertainty and turmoil aren't helpful, he said.

"The new NAFTA, we need it ratified," Veach added. "We need some stability coming into our markets."

Meanwhile, in written statements, members of the Arkansas congressional delegation weighed in on the latest developments.

"While I agree with the President that more must be done to address the crisis at our southern border, I remain hopeful that we will find a solution without using tariffs as a weapon," said U.S. Sen. John Boozman, a Republican from Rogers. "Mexico is our number one trading partner, so we should focus on finalizing the USMCA as it [is] poised to deliver economic benefits to Arkansas' farmers, manufacturers and small businesses."

U.S. Sen. Tom Cotton suggested the onus is on Mexico to fix the problem.

"Mexico ought to live up to its commitments to stop the flood of illegal aliens at our border," the Republican from Dardanelle said. "If Mexico helps us resolve the crisis at the border, all this speculation about tariffs will be moot."

U.S. Rep. French Hill said he believes across-the-board tariffs hurt U.S. manufacturers and farmers in Arkansas and elsewhere.

"The threat of tariffs can be a useful negotiating tactic to bring other countries to the table to compel change, but they shouldn't be implemented as a widespread policy. In my view, their use in this instance is a bad idea," the Republican from Little Rock said.

"We need a new national security plan with Mexico and the triangle nations of Guatemala, Honduras, and El Salvador. Following the example of acting Homeland Security Secretary Kevin McAleenan's recent visit to Guatemala, President Trump should reset bilateral expectations on security and civil society partnerships. He doesn't need to threaten tariffs to achieve this. Our economic and security relationship with Mexico is very important, and I hope that they will help us combat the immigration crisis on their southern border with Central America and our southwest border. Additionally, Speaker [Nancy] Pelosi should bring the USMCA--the replacement for NAFTA--to the House floor for consideration."

U.S. Rep. Steve Womack portrayed an immigration crisis.

"There is no question that we have a crisis at our southern border. I support the President calling on Mexico to do its part to address this serious issue -- but I'm concerned about the unintended impacts these tariffs could have on the Third District," the Republican from Rogers said. "I worry that these tariffs would hurt Arkansas businesses, consumers, and the ability for us to move the USMCA forward. This trade agreement with Canada and Mexico is critically important to Arkansas, and I want to do everything in my power to make sure it crosses the finish line."

U.S. Rep. Bruce Westerman stressed the importance of trade partnerships and the downside of tariffs.

"We've got to get USMCA completed. Tariffs are taxes on consumers, and we need to complete USMCA and secure the border," the Republican from Hot Springs said.

U.S. Rep. Rick Crawford, a Republican from Jonesboro, wasn't available for comment Tuesday.

But his spokesman, Sara Robertson, said Crawford hopes negotiators for both countries "can work out an amicable agreement that will help solve the humanitarian crisis we continue to see at our southern border. Reports indicate that Mexican officials are working diligently and in good faith with many elected officials and the administration so potential tariffs can be avoided and we can move forward to ratify the USMCA agreement and our ag-producers can reap the benefits of a better trade deal."


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