The World Trade Organization (WTO) recently announced its decision to allow Canada and Mexico to retaliate against U.S. goods with more than $1 billion in tariffs.
The tariffs, a result of our nation's contentious country-of-origin labeling (COOL) requirements, could be avoided if the Senate acts quickly. Otherwise, Canada and Mexico could implement the tariffs at any time, and on the goods of their choice. Potential retaliatory items expand beyond cherries, meat, wine and other agricultural products and could negatively impact manufactured goods.
"If the Senate doesn't repeal COOL for beef, pork and chicken, the tariffs will put farmers in Michigan and nationwide at great financial and economic risk," said John Kran, Michigan Farm Bureau's associate national legislative counsel.
The WTO's arbitrator determined annual damages to Canada at $780 million and Mexico at $227 million. These figures are less than what the countries originally requested; Canada had sought more than $2 billion in retaliation and Mexico more than $653 million.
While the House voted in May to repeal the law, the Senate has been unable to reach a consensus. Agricultural organizations are working with House and Senate leadership on a provision for potential inclusion within the omnibus spending bill they will consider later this month, but this is not guaranteed.
"Canadian and Mexican leaders have consistently said that if the United States simply stops labeling products in a way that causes discrimination against their livestock producers, they would have no interest in assessing penalties," said Ernie Birchmeier, MFB's livestock and dairy specialist. "Free trade helps our economies and likewise, restraining trade hurts them. But in the political world it never seems that simple."
Related: Clock is ticking on COOL penalties