A Battle Plan for Mexico's U.S. Trade War

Disputes between Mexico and the United States over the North American Free Trade Agreement are not new. In March 2009, after years of litigation, the U.S. government abruptly suspended a pilot program that allowed Mexican truck drivers to deliver goods across the border. Mexico retaliated, imposing tariffs as high as 45 percent on $2.4 billion worth of U.S goods (89 products in total). The punitive impact of such tariffs on U.S. business convinced Washington to re-think its position, paving the way for a resolution to the dispute.

Two lessons loom large from this experience: First, the feud benefited no one, hurting businesses and jobs on both sides of the border; second, its resolution required both parties to be on relatively equal footing in the negotiation. Now, as another potentially more damaging tit-for-tat tariff war looms, that argues for a robust Mexican response to President Donald Trump's aggressive negotiating posture. Our solution: Mexico should target products coming from states that were critical to Trump's victory in the Electoral College.