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If Trump imposes tariffs, Mexico has options, says trade law expert

If President Donald Trump executes an executive order imposing 5 percent tariffs on Mexico as he has threatened to do, the Mexican government has several ways it can push back against the action, according to a trade law expert. Raj Bhala is the Brennesein Distinguished Professor at the University of Kansas Law School, and a Senior Advisor at Dentons.

“They really have really three levels of recourse,” said Bhala. “One is through the World Trade Organization. Mexico could sue the United States and it would have several strong claims, one of which would be that the U.S. has violated the Most Favored Nation obligation, which is in Article I of the General Agreement on Tariffs and Trade, because the U.S. has put tariffs only on Mexican goods and not on goods from other countries, say India or Turkey.”

That case would take about 12 to 18 months to go through the WTO system. The U.S. would then have roughly another 15 months to comply.

“The second recourse is through NAFTA itself, NAFTA 1.0,” said Bhala. “Mexico could invoke a NAFTA arbitration panel, a three-member ad hoc panel, which would then hear the case. The claim that Mexico would bring is that there’s no basis, having already phased out tariffs over the last 20 years, there’s no basis for the U.S. to reimpose them.”

That case would take several months to a year to resolve through the NAFTA arbitration system.

“The third recourse is really in the U.S. Congress,” said Bhala. “Continuing to work with Congresspersons and Senators and impress upon them how this would be devastating for both countries if tariffs were to go through. In other words, lobbying.”

Congress does have the power to override the executive order with two-thirds majorities in both houses, though that has never happened.


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