Mexican President Andrés Manuel López Obrador mockingly dismissed the Biden administration’s recent threats to take actions possibly leading to tariffs imposed on Mexican goods Wednesday, according to The Wall Street Journal.

“Ooooh, I’m so scared…,” Obrador sarcastically said when asked about possible U.S. enforcement measures for practices that allegedly favor Mexico’s national energy companies, CFE and Pemex, the WSJ reported. Obrador made the comments on the same day that United States Trade Representative Katherine Tai announced the United States has requested dispute settlement consultations with Mexico under the United States-Mexico-Canada Agreement (USMCA), which could end up placing penalties on some Mexican exports if the two sides can not come to an agreement.

Mexico is the United States’ second largest trading partner behind Canada, but Obrador and President Joe Biden have been increasingly at odds in recent months, including on matters of trade policy, energy and the extradition of WikiLeaks founder Julian Assange, according to the WSJ.

We have serious concerns about changes in Mexico’s energy policies and their consistency with commitments under the USMCA. We have tried to work with the Mexican government to address these concerns—unfortunately U.S. companies continue to face unfair treatment in Mexico. https://t.co/YZF5GEjY3r

— Ambassador Katherine Tai (@AmbassadorTai) July 20, 2022

Since coming to power in 2018, Obrador has sought to privilege CFE and Pemex to make the country more self-sufficient in energy production, The New York Times reported.

However, U.S. officials and energy companies allege that Mexico is favoring its state-owned energy companies in violation of USMCA on things like pricing, emissions standards, and contract terms, according to the NYT.

“Mexico’s energy policies adversely impact U.S. companies that want to invest and grow in Mexico, and are inconsistent with Mexico’s commitments under the USMCA. They also roll back the reforms Mexico previously made to meet its climate and environmental goals under the Paris Agreement,” a spokesperson for the Office of the US Trade Representative told the Daily Caller News Foundation.

Under USMCA’s dispute settlement system, the U.S. and Mexico now have thirty days to begin consultations, the WSJ reported. If those do not yield a resolution, the U.S. could request a panel of experts to mediate the dispute, and ultimately impose tariffs on Mexican goods to counterbalance the damage done to U.S. companies, the WSJ added.

“Canada has consistently raised its concerns regarding Mexico’s change in energy policy. We agree with the United States that these policies are inconsistent with Mexico’s…obligations,” a Canadian government spokeswoman told the WSJ.

The Mexican Economic Ministry has been less derisive than Obrador, issuing a statement Wednesday that “The Government of Mexico expresses its willingness to reach a mutually satisfactory solution during the consultation phase.”

Mexican trade representatives did not immediately respond to the DCNF’s request for comment.

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