The deals struck by the U.S., Mexico and Canada in renegotiating the North American Free Trade Agreement promise new trading opportunities for U.S. farmers, but the Trump administration’s trade wars and the tariffs that go with them more than negate the potential gains, according to a new study presented today by the Farm Foundation. The three-country pact - now dubbed the United States, Mexico, Canada Agreement with the unwieldy acronym USMCA - is expected to eventually increase U.S. exports of mostly dairy and poultry by $450 million annually. It’s a significant boost, said Dominique van der Mensbrugghe, a research professor at Purdue University and one of the authors of the study, but retaliatory tariffs being levied on U.S. farm commodities by Mexico, Canada, China and other countries threaten to far outweigh gains from the USMCA.The study finds that Canadian and Mexican tariffs “will cause U.S. agricultural exports to decline by $1.8 billion,” according to van der Mensbrugghe and the other authors, all of whom work at Purdue. If Chinese and other tariffs are included in the calculations, “the United States would see a decline in agricultural exports of $7.9 billion, thus overwhelming the small positive gains from USMCA.”The U.S. hit Mexico and Canada with tariffs on steel and aluminum on May 31 and both countries have retaliated. Mexico responded with tariffs that rose quickly to 20-25 percent on U.S. cheese, pork, potatoes, apples and other commodities. Canada is also imposing new taxes on the U.S., but those tariffs focus mainly on value-added products like ketchup, strawberry jam, yogurt, maple syrup and whiskey.
China is more complicated. The country has hit just about every U.S. farm commodity with import taxes, retaliating both against the tariffs the U.S. placed on steel and aluminum as well the U.S. tariffs aimed at punishing China for intellectual property theft. China has been historically the largest foreign market for U.S. soybeans, but that has changed this year since China levied a 25 percent tax on the oilseed.