Porker of a Problem
New tariffs raise stakes on cross-border trucking issue
Congress has a new pork problem. And this time, it’s literally the four-legged kind that is giving some legislators a headache.
Mexico has added pork — along with ketchup, certain types of cheese, pistachios and other farm and manufactured goods — to its list of retaliatory tariffs in protest of the United States’ reluctance to open the border to Mexican trucks.
Last year after the Obama administration cut funding to a cross-border pilot program that allowed up to 100 Mexican carriers the right to haul beyond the 25-mile commercial zone in an attempt to satisfy the United States’ North American Free Trade Agreement obligations, the Mexican government was quick to place tariffs on 89 U.S. goods. For the most part, the original tariffs were placed on products that didn’t impact the Mexican economy as much as it did U.S. exporters.
In August, Mexico dropped some goods from the export list and added others, raising the total to 99 products that now cost some U.S. growers and manufacturers an estimated $2.5 billion annually. Economists say the revamped tariffs will affect U.S. exporters in 43 states.
The game of musical tariffs looks to be Mexico’s attempt to find the right combination of U.S. exports to force the Obama administration to address the cross-border trucking program.
The problem is nothing new. It goes back almost two decades. Opponents of opening the border say Mexican trucks don’t meet U.S. safety standards. While the Bush administration’s pilot program found authorized Mexican trucks fared well quite well compared to U.S. trucks, the limited nature of the program has done little to convince its critics. They felt the carriers were cherry-picked and if the border is ever opened, subpar Mexican trucks would put U.S. drivers at risk. Others fear Mexican drivers would put American truckers’ jobs in jeopardy with illegal cabatoge practices.
Complicating the matter has been unrelated immigration and border security issues that are increasingly sparking volatile debates in border states, as well as at the national level.
Aside from the arguable Mexican truck safety issue are real roadblocks to resolving the problem. At the top of the list is the growing drug cartel violence in Mexico that makes a truly reciprocal cross-border trucking program unappealing to American truckers because of safety concerns with hauling into Mexico.
All of this leaves the Mexican trucking issue at a stalemate with politics outweighing economics for the past year. Up until now, the tariffs have been viewed as more of a pinch than a bite by politicians who are more worried about re-elections than pig farmers in Iowa or apple growers in Washington state.
While there have been vague hints that both governments are working to resolve the issue, don’t expect to see a resolution before mid-term elections. The lip service is all about image and a stalling tactic.
At some point, the United States is going to have to address the issue once and for all. Aside from our reputation as a country that lives up to its word, it makes good economic sense. A trade war doesn’t.