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.”
Labor regulations in Mexico and how the country deals with cartels is also being discussed, Torres said.
“As Ralph (Garcia, COO of MEDC) mentioned, there’s some legal labor uncertainty in Mexico, and also the violence in Mexico with the cartels. That is part of the politics, and that's part of the pressure that the US is putting on Mexico. So, we'll see what happens. It's going to be very interesting year.”
IEEPA Refunds
In his presentation to MEDC, Torres also spoke about the complexity involved in giving refunds to companies that had to pay tariffs under IEEPA. In February, the U.S. Supreme Court struck down one of President Trump’s signature issues - imposing tariffs under the Emergency Economic Powers Act (IEEPA).
“It (giving refunds) is going to be an automated process that supposedly will be ready sometime in April. That's what they're saying. I think that's aggressive, but hopefully they'll be ready for that, so importers that paid the tariffs will be able to get their refunds through reports, Excel files, being uploaded,” Torres said.
“It will be simplified. However, one of the conditions is that importer has to have an ACH account to get the refund electronically. That's one of the challenges because it is very complex, the volume of transactions.”
Torres said there are about 330,000 importers that were affected by IEEPA, and 53 million import transactions that were affected by IEEPA.
“There’s about $156 billion of potential refunds. So, we're talking massive amounts of volumes from an importer-transaction-money perspective.”
One of the issues, Torres said, is that less than 10% of those importers have an ACH electronic account to get the refund back electronically.
“So, we're pushing importers to get their ACH set up. A lot of them ignored it. Actually, it's been in effect since February 6. Any refund from Customs has to be done electronically, but the companies are not getting into the swing of things. But now, with IEEPA, they're going to have to be there regardless.”
Torres said April or May is the likely time frame to get the refund process moving along.
“Obviously, there are a lot of questions, such as who gets a refund? The importer pays the tariffs, so they're going to get the monies, but are they going to pass it along to the consumers? All of that is internal, so we're not going to get into that.”
Editor's Note: Here is an audio recording of Jorge Torres' remarks at the McAllen EDC stakeholders committee meeting:
