US President Donald Trump has unveiled a temporary rollback to steep tariffs targeting Canada and Mexico, providing some reprieve to companies and consumers after sustained blowback on global markets.
After Trump’s sweeping tariffs of up to 25 percent on the two US neighbours took effect Tuesday, stock markets tumbled, as economists warned that blanket tariffs could weigh on US economic growth and raise inflation in the near-term.
Though the US president dismissed suggestions that his trade decisions were linked to market turmoil, he decided to pause the levies for trade with Canada and Mexico that falls under a regional pact.
The halt will last until April 2, when Trump has promised updates for "reciprocal tariffs" to remedy practices Washington deems unfair.
However, the Republican leader insisted Thursday that steel and aluminium tariffs – which are sure to affect trade with Argentina – would not be modified and would kick in as planned next week on March 12.
Asked by reporters whether tariffs on these metals would be postponed, the president replied that "No, they will not be modified," adding that "they will come into effect next week."
That will be a blow to Argentina and its President Javier Milei, who has formed a strong relationship with Trump and has repeatedly voiced his desire for a free-trade deal.
Argentina's steel and aluminium exports to the United States represent some US$600 million in annual trade.
According to data from the INDEC national statistics bureau, bilateral trade with the United States produced a surplus of US$228 million last year, mainly due to a 27.9-percent drop in imports from the United States, as a result of Argentina’s ongoing recession.
Headache
Trump’s decision to impose tariffs on imports in order to boost local production threatens to become a developing headache for Argentina, potentially damaging its growth projects for the year.
Though Milei and Trump have both voiced support for the idea of a free-trade deal between the two nations, the reality is that any such accord is unlikely in the short term.
Agreeing a FTA with Washington would mean Argentina would likely have to leave the Mercosur regional trade bloc.
Argentina has some 20 free-trade agreements, 13 of which are Mercosur agreements.
In contrast, neighbouring Chile (which is not part of Mercosur) has more than 700 agreements with other countries.
Last week, Trump confirmed that tariffs on imports of agricultural goods would kick in next month. He did not specify which products will be subject to these tariffs or whether there will be exceptions.
Argentina's agro-industrial exports to the United States amount to around US$2 billion a year and are highly diversified. Many of the products sent to North America play a key role in regional economies, such as citrus fruits, especially lemons.
The trade war could complicate the already modest economic growth outlook for Argentina’s economy.
– TIMES/AFP/NA
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