Trump Tariffs Target Top U.S. Ag Trade Partner

Just months after retaliatory tariffs deposed China as the leading customer for U.S. farm exports, President Trump threatened import duties of up to 25% on Mexico, the No. 1 food and ag trade partner of the U.S. Farm groups fear the trade war will cut deeper into the shrinking global market for U.S. crops and livestock.

Farm exports are forecast to drop by 4.5% this year, to $137 billion, the lowest total in three years, chiefly due to the collapse of sales to China. Together, Canada and Mexico account for one third of U.S. food and ag trade, with Mexico responsible for a slightly larger combined value of imports and exports than Canada — $46 billion vs. $45.2 billion, according to USDA estimates for this fiscal year.

"Here we go again," said Roger Johnson, president of the National Farmers Union. Trump's "ham-fisted approach" of threatening tariffs on trade partners could destroy U.S. export markets, he said. "And, as always, should Mexico choose to implement retaliatory tariffs, agriculture will likely be the first industry targeted."

Groups representing hog, corn, and wheat producers asked for a change in course by the administration and said tariffs would reduce the chances of passing the successor to NAFTA, the United States-Mexico-Canada Agreement.

"I think that's going to tank the agreement," said House Agriculture Chairman Collin Peterson on the Adams on Agriculture program. Senate Finance Chairman Charles Grassley also said the USMCA would be in jeopardy. "I support nearly every one of President Trump's immigration policies, but this is not one of them. I urge the president to consider other options," said Grassley.

Mexican and U.S. officials are scheduled to meet on Wednesday to try to resolve the tariff threat. Trump announced last week that tariffs of 5% on all goods from Mexico would go into effect on June 10, rising steadily to 25% by October 1. "Tariffs will permanently remain at the 25% level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory," said Trump. "Workers who come to our country through the legal admissions process, including those working on farms, ranches, and in other businesses, will be allowed easy passage."

Trump will be in Europe when the U.S. and Mexican officials meet. "We want action, not talk," he said on social media on Sunday.

Agriculture Secretary Sonny Perdue said Congress and Mexico should work with Trump on border security. "It is my hope that this can happen in a timely manner so tariffs do not have to be implemented."

Mexico is a major source of fresh fruits and vegetables for U.S. consumption, particularly during the winter. The leading U.S. ag exports to Mexico are corn, soybeans, pork, dairy, and beef. The National Corn Growers Association said Mexico is the largest corn export market. The National Pork Producers Council said hog farmers lost an average of $12 per head during 2018 because of Mexican tariffs imposed in response to U.S. tariffs on steel and aluminum imports. Those tariffs were removed a couple of weeks ago.

"American pork producers cannot afford retaliatory tariffs from its largest export market, tariffs which Mexico will surely implement," said David Herring, NPPC president. "We appeal to President Trump to reconsider plans to open a new trade dispute with Mexico."

By coincidence, export-promoting U.S. Wheat Associates is spending USDA grant money on a conference this week to encourage Mexican food companies to buy U.S. wheat. The USDA funding comes from a specially created program to mitigate the impact of the trade war with China.

"The potential fallout from new tariffs is like struggling to survive a flood then getting hit by a tornado," said USW Chairman Chris Kolstad.