Obama Faces First Trade War With Mexico Over Truck Ban

President Obama is facing his first trade war after Mexico slapped import tariffs on $2.4 billion in U.S. goods in retaliation for a ban on its trucks from American roads.

Congress ignited the trade skirmish last week by killing a pilot program begun in 2007 that had allowed a few Mexican 18-wheelers to deliver goods across the border.

"Right now, these trade agreements are contracts and if either side breaks that contract, there's repercussions," said Rep. Kevin Brady, R-Texas, the top Republican on the trade subcommittee of the House Ways and Means Committee.

Economy Secretary Gerardo Ruiz Mateo imposed the tariffs Monday on about 90 U.S. products from 40 states, which will include farm goods such as rice, beef, wheat and beans.

Mateos said the decision violates a provision of the North American Free Trade Agreement among the U.S., Mexico and Canada, enacted 15 years ago amid opposition from U.S. labor unions.

"We consider this U.S. action to be wrong, protectionist and a clear violation of the treaty," Mateos told reporters Monday. "By deciding to protect their trucking industry, they have decided to affect other countries and the region."

When NAFTA was signed in 1994, the U.S. promised to give Mexican trucks full access to the U.S. markets, but 15 years later, Mexico is still waiting.

Democratic Sen. Byron Dorgan of North Dakota killed the program by inserting a provision into the $410 billion spending bill Congress just passed and Obama signed last week. Dorgan cited broader concerns for killing the program.

"There are not equivalent standards and there's no central repository of records so we would know what drivers' records or what accident records are in the country of Mexico," Dorgan told FOX News.

The Teamsters Union has long objected, saying Mexican trucks are unsafe. But others contend this is more about politics than safety.

"We're seeing a lot of union driven provisions," Brady said. "Not just trucking but the 'Buy American' provisions which could well cost us American jobs."

After repeated inquiries, no one could point to any unsafe incidents. Mexican officials say that's because there are none. The U.S. Chamber of Commerce agreed.

"These are some of the most inspected trucks in the world, and the records show that they performed very well," said John Murphy, vice president of international affairs at the U.S. Chamber of Commerce.

Mateos said the department later this week will publish a list of the products, which he said were chosen to represent a large number of U.S. states and significant trade items.

He did not specify how much tariffs would be increased but said, "the retaliatory measures are the cost the United States is going to have to pay for failing to fulfill its obligations under NAFTA."

Mexico is the third-largest U.S. trading partner after Canada and China, according to the Commerce Department. In 2008, the U.S. and Mexico had $368 billion in total trade.

Dorgan argues Mexico is getting more out of NAFTA than the U.S. because Mexico sells $66 billion dollars more in goods to the U.S. every year than the U.S. sells Mexico.

"What I say is they have responsibility to buy far more in American jobs because we have a huge and abiding deficit every year with Mexico and we shouldn't allow that to stand," Dorgan said.

But the Chamber of Commerce noted Mexico is America's second biggest export market and that the U.S. would come out ahead if not for all the oil the country buys.

"In manufactured goods, we have a surplus with Mexico," Murphy said. "We send all kinds of sophisticated manufactured goods, capital goods to Mexico."

The administration says Obama has asked the office of the U.S. Trade Representative to work with the Department of Transportation, State Department and Congress to create a new trucking program.

"We see Mexico as a valuable trading partner," White House spokesman Robert Gibbs said. "Obviously, exports create jobs here in this country, and we don't want to find ourselves in a time of economic slowdown creating or erecting a barrier to that valuable trading partnership."

FOX News' Jim Angle and The Associated Press contributed to this report.