Mexico has announced new tariffs on US products in response to Donald Trump's decision to impose steep duties on imports of steel and aluminum. The list includes whisky, cheese, steel, bourbon, and pork. Analysts say the tariffs are designed to hit US Republican strongholds ahead of mid-term elections in November.
Mr. Trump last week levied tariffs on steel and aluminum imports from Mexico, Canada and the European Union, riling key US allies. The move has also dismayed some domestic businesses, including pork producers, who now face a 20% tariff on exporting leg and shoulder to Mexico.
Mexico is the largest market for US pork exporters. Other products affected by the new tariffs include apples and potatoes. Certain cheeses and bourbon will be hit with 20% to 25% duties.
Mexico - a net importer of US steel - is also putting 25% duties on a range of American steel products.
The potential economic effect on US exporters could damage Republican support ahead of November's midterms.
In Iowa, the top pork-producing state in the US, with Mexico as its largest market, Republican Congressman Rod Blum is seen as vulnerable.
We need trade and one of the things we're concerned about is long-term implications that these trade issues will have on our partnerships with Mexico and Canada and other markets, Iowa Secretary of Agriculture Mike Naig, a Republican, was quoted
If our customers around the world start going to other parts of the world for their supplies, that is a serious problem, he said.
The renewed trade dispute between US and Mexico comes amid fraught attempts to renegotiate the trillion-dollar North American Free Trade Agreement (Nafta). The agreement governs trade between the US, Canada and Mexico.
President Trump's economic adviser, Larry Kudlow, on Tuesday revived a possibility that the president would attempt to replace Nafta with bilateral deals with Canada and Mexico - a move both nations oppose.
US-Mexico trade is worth about US$ 600bn annually and about 16% of US goods go to its southern neighbor. Mexico sells about 80% of its exports to the US.