February 28, 2018 / 7:00 PM / 6 months ago

Mexico concerns about U.S. steel tariffs hang over NAFTA talks

MEXICO CITY, Feb 28 (Reuters) - Mexico’s trade minister will discuss the threat of U.S. steel import tariffs with U.S. Commerce Secretary Wilbur Ross on Wednesday, two sources said, adding to trade tensions during the latest push to renegotiate the NAFTA trade deal.

The meeting in Washington between Economy Minister Ildefonso Guajardo and Ross comes as U.S., Mexican and Canadian officials are meeting for a seventh round of negotiations to rework the North American Free Trade Agreement in Mexico City.

The NAFTA talks have been made halting progress in the past six months, though officials say a number of less controversial issues under discussion could be resolved in this round.

Trump is currently considering Commerce Department proposals to impose steel and aluminum tariffs on imports from China and elsewhere following a so-called Section 232 probe looking at whether imports of the metals threatened U.S. national security.

Guajardo flew to Washington on Tuesday, and an official said that the metal tariffs would be on the agenda as would tomatoes, another area of bilateral trade that has been dogged by disputes and subject to periodic renegotiation.

If the United States imposed steel tariffs on it, Mexico’s government would seek to retaliate, the official said - just as it vowed last month to act against a decision by Washington to slap tariffs on imported washing machines and solar panels.

Trump authorized the investigations in April after U.S. steel and aluminum manufacturers complained they were being forced out of business due to excessive foreign dumping.

The Commerce Department has confirmed the talks. Ross has said he expects countries will challenge any steel tariffs at the World Trade Organization.

Among the options before Trump is a tariff of at least 24 percent on steel products from all countries. However, Trump could decide to exempt some countries from any measures, including NAFTA trading partners like Canada and Mexico.

Canada’s Prime Minister Justin Trudeau said in July that Trump told him that he did not expect to subject Canadian steel and aluminum to tariffs on national security grounds.

There are concerns that stiff U.S. tariffs could raise global steel prices, which would impact Mexico. While Mexico is a large steel importer, it also exported approximately 4.5 million tonnes in 2016.

Meanwhile, Steve Verheul, Canada’s chief negotiator in the NAFTA talks, told reporters some headway was being made.

“We’re making reasonably good progress so far,” he said, without elaborating.

U.S. trade officials met with auto industry executives in Washington on Tuesday to make progress on a major sticking point around vehicle production.

The U.S. negotiator handling rules of origin for automobiles unexpectedly returned to Washington for consultations earlier this week. It was still not clear why.

People familiar with the matter said representatives from the office of U.S. Trade Representative (USTR) Robert Lighthizer had met separately with executives from Ford and General Motors on Tuesday afternoon.

The GM meeting lasted less than an hour and was routine. No major breakthroughs or policy changes were discussed, according to one source briefed on the meetings. (Reporting by Lesley Wroughton, Dave Graham and Sharay Angulo; Editing by Cynthia Osterman)

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