The European Union and Mexico have agreed to a revamped free-trade agreement days before Trump begins a second term. Mexico, in particular, has been working to revamp the trade deal with the EU ahead of Trump’s inauguration as a way to show strength before the review of the US-Mexico-Canada trade agreement, known as USMCA. The U.S. is, by far, Mexico’s biggest trade partner, accounting for 83% of Mexico’s trade relationship. Trump has criticized the EU’s trade practices and said he would impose duties on exports by the bloc. He’s also said he’d impose 25% tariffs on goods from Mexico.

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Back in 2018, the Trump administration imposed a25 percent levy on imported steel and 10 percent on aluminum, arguing that cheap imports were a national security threat and were decimating whole communities. The former president called the tariffs a big win for the country, saying they had helped revive U.S. steel and aluminum industries and created thousands of new jobs. Yet, evidence for the same was tenuous or mixed at best.

American steel manufacturers did receive an initial boost, withthe New York Times reporting that dozens of steel companies had re-opened or made new investments courtesy of the tariffs. However, the bounty was only short-lived, with steel prices rapidly falling back to pre-tariff levels. Shares of steel companies were beaten up pretty badly during the time Trump was president. The one thing the tariffs undoubtedly achieved was a deterioration in relations between America and its closest neighbors and trade partners.

However, after months of games of high-stakes brinkmanship, Trump finally ended tariffs on steel and aluminum imports from Canada and Mexico, marking the first time the former president backed down on protection once it had been imposed. Trump is not known to be this charitable, with a reworked trade deal with South Korea in the previous year resulting in tariffs being replaced with quotas which were just as punitive. Washington was actually pushing for a similar quotas-for-tariffs swap with Canada and Mexico, but they stood their ground.

By Alex Kimani for Oilprice.com

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