Torres discusses USMCA, tariffs, at McAllen EDC stakeholders committee meeting

MCALLEN, TEXAS - Hopefully, a revised USMCA will allow Mexico to avoid being impacted by the new tariffs President Trump is trying to impose - in which case the new tariffs on steel from Mexico would be eliminated.

This is the view of Jorge Torres, president of Rio Grande Valley-based Interlink Trade Services. Torres gave an update on the United States-Mexico-Canada Agreement negotiations at a recent meeting of the McAllen Economic Development Corporation Stakeholders Committee.

“The USMCA revision is happening right now. Mexico’s Secretary of the Economy, Marcelo Ebrard, and US Trade Representative Jamieson Greer have had meetings. And the meetings have been somewhat positive,” Torres said.

“Obviously, they're looking at reinforcing the supply chain in the three countries. And that is something that is critical for us. They want to enforce the rules of origin on regional value content. They want to get more regional content, obviously.”

Torres continued: “Mexico is pushing for not being affected by external tariffs, which is Sections 122, 301, 232 and all that. That's an uphill fight, but hopefully they'll get there, somehow. That will be critical to getting rid of the steel tariffs and the Section 301 investigations, all the tariffs that the President wants to impose. If they can isolate Mexico, that would be great. But again, that's an uphill battle, because the U.S. is demanding a lot of Mexico.”

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Transcript

SPEAKER_00 0:01

Okay. Well there's a lot of stuff going on and uh actually uh two weeks ago we had Craig Hawks that's good for putting that on. Uh we provide some information there regarding what's going on. But we still have the AIPA refund process, the additional tariff situation, and the USNCA renegotiation. So from the AIPA refund process, as we know, AIPA tariffs were struck down by the Supreme Court. So now we've seen some formal information coming out, which uh there's gonna be a refund process. Um the CDP is putting together should be they're about 50-60% complete. It's gonna be uh automated process that supposedly will be ready by probably sometime April. That's what they're saying. I think that's aggressive, but hopefully they'll be ready for that, in which uh importers that pay the IPA tariffs will be able to get their refunds through uh reports, Excel files, upload them. Uh it will be simplified. Uh however, uh the uh the condition, one of the conditions is that importer has to have an ECH uh account to get the refund electronically. Um it that's that's one of the challenges, and also the complexity, the the volume of transactions. There are about 330,000 uh importers that were affected by AIPA, about 53 million import transactions that were affected by AIPA. Um there's there's and 166 billion dollars of potential refunds. So you we're talking massive amounts of volumes from an importer uh transactional and money perspective. One of the issues is that only less than 10% of those importers have an ACH electronic account to get the refund back electronically. So we're pushing importers to get that, uh, their ACH setups. Uh, a lot of them ignored it. Actually, it's been efficient since February 6th that they have to get any refund from customs have to be done electronically. But uh the companies are not getting into the swing of things, but now the AIPA, they're gonna have to be there regardless. So, so anyway, uh so that's in process. Hopefully, uh we'll hear more in the next. Actually, today uh CBPs haven't given an update to this uh Court of International Trade or where they stand, but we're looking at April May timeframe uh for to get the the refund process uh moving along. Obviously, there's a lot of questions to who gets a refund. I mean, the importer record pays the tariffs, so they're gonna get the monies, but are they gonna pass that along to the consumers and customers and all that? That's internal, so we'll we're not gonna get into that. And then, you know, like we mentioned in the trade talks, uh, this is not the end of the road for tariffs. Uh actually, we you know we got immediately uh we got the section 122 tariffs, which is the imbalance of payments. It's a 10% right now for 150 days, so it will lapse at the end of July. Uh so that's across the board, 10% uh for all countries, except Mexico and Canada if they're USMCA qualified products, so that's a that's an advantage. Uh but in the meantime, uh the VXG president is working on other section 301. Uh he's picking 301 as the go-to for additional tariffs. There's two investigations that just opened last week. One is for excess capacity, and the other one is for forced labor. That's excess capacity is affecting about 16 countries, and uh forced labor is affecting uh 60 countries, which is about over 90% of the total trade that the US has. So the common period is gonna uh end um, it's open and it's gonna end on the April 15, and then the hearings are gonna be late April, early May. So we expect to see some Section 301 tariffs by uh before the lapse of uh section 122. So uh again, you know, getting the AIPA refunds is one thing, but then we have these sort of tariff provisions right now on the 122, and then we're getting 301s, maybe 232, section 232 later on. So we're gonna see tariffs for a while. Uh and uh which brings uh back my comments about foreign trade zones that you know with tariffs, uh with the trade environment of having a foreign trade zone here for duty deferral purposes is for our advantage, it's a competitive advantage, so we need to sell well. Um and then the the other is the USMCA revision renegotiation, which is currently happening right now. Uh there the meeting started this week. Um, I said Ebr and the US Representative have had meetings. They've been somewhat uh positive. Obviously, they're looking at the uh reinforcing the supply chain among three the three countries. So that's something that is critical for us because uh you know they're seeing that Mexico is needed uh as a strategy. So they're gonna enforce the rules of origin on regional value content. They want to get more regional content, obviously. Uh so hopefully, and and Mexico is pushing for not being affected by sectoral tariffs such as 232, 301, all that. Uh that's that's an uphill fight, but hopefully they'll get there somewhere. That would be critical to get rid of the steel aluminum tariffs and the section uh 301 investigations, all the new tariffs that the president wants to impose. If if they can isolate Mexico, that would be great, but again, that's an uphill battle because uh the US is demanding a lot on Mexico, and Rob mentioned about the labor law, there's there's some uh legal labor uh uncertainty in Mexico and also the the violence in Mexico, the cartels. So, you know, that's that's part of the politics, and that's part of the pressure that the U.S. is putting in Mexico. So we'll see what happens. So it's gonna be a very interesting year, again. Uh I was wrong, Steve, you know, when we interview me earlier this year. So uh so we'll see. You know, that's pretty much it.

SPEAKER_01 6:35

So from Johnny Joe, me sitting here just hearing tariff being bad about in the news. Tariff, obviously, there's a lot going on in the back side. Uh there are several different types of tariffs. Tariff is not just a general term. You just use tariffs are here, tariffs are gone. Tariffs kind of are always around and used as a tool.

SPEAKER_00 7:00

Is that is that fair? We have duties and tariffs. Duties are based uh we have the MFM, the most preferred nation, tariffs or duties, uh, which is a duty rate. Uh, those have been there forever. I mean, obviously, the being part of the work organization, that kind of forces countries to you know lower duties, you know, duty rates. But tariffs are used in a different manner, like we've seen now. It's more from a political standpoint. That's how the current administration has been using tariffs. Tariffs are beautiful, right? Uh, so uh yeah, we uh you know the president has different mechanisms to impose tariffs. One was already struck down, the AIPA, because AIPA, uh the Emergency Act, uh Powers Act, mentions uh other things, but they don't mention tariffs. So he he went very far with the with the AIPA. But section 232, section 301, section 122, section 338, they do a lot of tariff impositions. So again, they're very complicated and they have different requirements, and it it can be by commodity, by country, there can be exceptions and all that. So that's what makes it very complicated to trade. Uh one thing is duty rates, and the other one is tariffs. Okay.

SPEAKER_01 8:22

I'm just curious. My son had a roommate in California, and a couple years ago, I guess when tariffs fell into play, you know, he he was complaining, and he's in a machinery business, a large machinery business, and had been hit. So I'm just I'm like, do I equate tariffs that he was having pain with as these same tariffs or the I mean, so it basically is. So when they talk about whatever billions of dollars it is on the refund side, it's a him. People who may have said, oh my gosh, I'm getting hit with this new this new thing, um, he potentially is getting some money back.

SPEAKER_00 9:02

If he was the importer record, he would get it directly. He can get it directly. But if he was not the importer record and he was you know the supplier in the US, build it included in the price or whatever, yeah, surcharge. The question is, how's he gonna get it back? That's where things can get complicated. Thank you, thank you for that notification.