2010, Volume 28, Issue 2
Klint W. Alexander, Bryan J. Soukup
Obama's First Trade War:
The US-Mexico Cross-Border Trucking Dispute
and the Implications of Strategic Cross-Sector Retaliation on U.S. Compliance under NAFTA
Upon taking office in January 2009, President Obama softened his tough rhetoric on free trade, warning repeatedly against tit-for-tat protectionism in the midst of an economic crisis. However, in March 2009, he signed the FY 2009 Omnibus Spending Bill into law, which cut off funding for the pilot program that allows Mexican longhaul trucks to deliver goods into the United States. According to the White House, President Obama wanted to create a new trucking project that would meet the "legitimate concerns" of Congress as well as U.S. commitments under NAFTA. The Obama administration asked the U.S. Trade Representative's office to work with Congress, the Department of Transportation, and the State Department to accomplish this task.
In response to the suspension of the pilot program, Mexican officials pursued an aggressive strategy against the United States. The Mexican government, acting under NAFTA Article 2019, imposed $2.4 billion in import duties ranging from 10 to 45 percent on 90 products from the United States.
Mexico has imposed rotating tariff hikes on a cross-section of goods in order to affect the greatest potential impact on U.S. trade and production. The typical sanctions approach under NAFTA is for the injured state to impose fixed countermeasures on a limited number of products or services in the same sector as that in which the harm has occurred. Here, the strategy is to apply pressure on industry groups, other than trucking services, in key states to mobilize political pressure on the Obama administration to alter its policy. This cross-sector approach is unprecedented under NAFTA.