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  • Writer's pictureDany Goldraij

Changes in the global economy? How Mexico and Panama are acting ?

Updated: Dec 18, 2021

Mexico Prepares Protectionist Measures

Arguing that they should protect the local industry from dumping, the U.S. plans to impose temporary tariffs on imports of steel, textiles, and footwear. The tariffs that would be approved through the signing of presidential decrees would be valid for six months, which would be 15% for steel products, and 25% or 30% for imports of footwear and textiles.

According to figures from the Trade Intelligence area at CentralAmericaData, between January and September 2018 Central American countries added $25 million in sales to Mexican companies, for clothing and clothing accessories, footwear, foundry, and iron and steel manufactures.

Could Mexico’s automotive sector be at risk?

cars industry

In 2015, Mexico assembled more than 3.5 million vehicles, making it the world’s seventh-largest manufacturer. According to AMIA, Mexico’s automotive industry association, Mexico is on track to assemble four million units (including light and heavy vehicles) by 2018 and five million units by 2020.

Most vehicles assembled in Mexico are shipped to the United States, for which Mexico is the third-largest supplier of imported cars, exceeded only by Germany and Japan.

Could Mexico wind up losing its competitive advantage in the sector because of U.S. protectionist measures?

YES, because President Trump, had threatened to impose U.S. import tariffs of 35% on cars produced in Mexico, but the damage to Mexico from U.S. protectionism would be significant because nearly 80% of Mexican automotive exports are shipped to the U.S. Moreover, the automotive sector represents about 3% of Mexico’s GDP and 18% of its manufacturing GDP.

mexican cars

The Panamanian government's decision to raise the tariff on meat imported.

The Panamanian government's decision to raise the tariff on meat imported from Nicaragua from 3% to 30% to allow local producers to compete has so far shown no clear results.

In September 2018, the Panamanian government decided to establish barriers to the entry of Nicaraguan beef by raising the import tariff from 3% to 30%. This has not had the expected effects, as the prices paid to local producers have not risen.

Although the immediate effect of the protectionist measures was a decrease in Nicaraguan meat income, prices for producers have registered a negative variation, since between 2017 and 2019 the price paid locally per kilogram of steer meat has fallen from $2.2 to $2.

The Conflict Between Panama and Nicaragua (Since 2018)

For Nicaraguan stockbreeders, the imposition of a 30% tariff on beef imports from Panama violates the conditions established in the trade agreement between the two countries.


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