Mexico warns it’ll cut off talks if U.S. adds NAFTA tariffs

Mexico’s top trade negotiator doubled down on threats to break off talks to rework NAFTA, saying his country will walk away if the U.S. insists on slapping duties or quotas on any products from south of the border.

“The moment that they say, ‘We’re going to put a 20 per cent tariff on cars,’ I get up from the table,” Mexican Economy Minister Ildefonso Guajardo said in an interview. “Bye-bye.”

This doesn’t mean, Guajardo emphasized, that Mexico would be looking to scrap NAFTA. But by saying it refuses to even discuss the kind of tariffs U.S. President Donald Trump has long trumpeted, the country is ratcheting up the pressure on U.S. negotiators and effectively daring them to pull out of the 23-year-old pact.

Trump has lambasted the threecountry accord — Canada is the third party — as unfair and responsible for a “massive” imbalance favouring Mexico. It last year shipped US$294 billion worth of goods north while the U.S. sent US$231 billion south.

Mexican officials have said they expect official talks to start in June. And if they fail?

“It wouldn’t be an absolute crisis,” said Guajardo, who headed the NAFTA office of the Mexican embassy in the U.S. in the early 1990s.

Without NAFTA, trade between Mexico and the U.S. would be ruled by World Trade Organization strictures limiting tariffs either country can impose on the other, with the average for Mexico at around three per cent, according to the Mexico City-based political-risk advisory firm Empra. That “would take away some of our margin of competitiveness,” the minister said, but would be manageable.

That’s if the U.S. remains in the WTO and abides by its rules.