A 21-page report from the Farm Foundation titled “How U.S. Agriculture Will Fare Under the USMCA and Retaliatory Tariffs” reveals a mixed message the farm economy.

The “new NAFTA” — the United States-Mexico-Canada Agreement — offers what the authors say “a sigh of relief to U.S. farmers.” However, the agreement won’t change all that much for U.S. fresh produce exporters.

From the report:

The impact on total U.S. agricultural exports is relatively modest at around $454 million.
Focusing on the target sectors, dairy exports increase by 5% and ‘other meat’ exports increase by 1.6%; to some extent this reflects the low share of U.S. exports in these sectors towards Canada (Figure 3). Export increases in the other two target sectors are much lower 0.4% and essentially 0% for ‘other animal products’ and ‘other food products,’ respectively.

In the broader context of the Trump administration tariffs on steel and aluminum, and retaliatory tariffs by Mexico and Canada, the report says the new NAFTA’s benefits will be more than erased by retaliatory tariffs.

From the report:

Simulations in this analysis show that the retaliatory tariffs enacted by Canada and Mexico on their imports of U.S. agricultural and food products would reverse any potential gains that emerge from implementation of the USMCA, with exports losses for the sector at roughly $1.8 billion. In the most affected sectors, these retaliatory tariffs lead to a decline in U.S. exports of ‘other meat’ products by 7%, dairy products by 1.2%, ‘food products n.e.s.’ by 2.6% and sugar by 1.3% (Figure 5). There is only a minor drop in the exports of fruits and vegetables. In value terms, the largest decreases in exports are observed in ‘other meat’ ($931 million) and ‘food products n.e.s.’ ($836 million). Exports in other sectors increase marginally as U.S. agriculture adjusts its production and exports towards the non-targeted sectors.

TK: As the study indicates, the quicker the steel and aluminum tariffs end, the better it will be for U.S. farm exports under the “new NAFTA.” The worst-case scenario occurs if the United States-Mexico-Canada Agreement fails to win approval by Congress. Let's don't go there...