A reworked North American Free Trade Agreement with Mexico — or whatever name that President Trump wants to give the deal — is a positive sign for U.S. growers slammed by retaliatory tariffs.
If Canada can pencil a similar trade deal with the U.S. in coming days, perhaps harmony and happy talk will reign for the U.S. and its neighbors.
But it may not be that simple.
Mexico’s steel industry on Aug. 29 requested the U.S. remove import tariffs on Mexican steel before the North American Free Trade Agreement renegotiation is completed.
According to media reports, Mexico’s National Iron and Steel Industry Chamber said in a press statement that the tariffs — in place since June — should be ended before a NAFTA deal is done.
“It is imperative that the Mexican government defend its national industry and request the exclusion of Mexico from the 232 measure before closing the negotiation between the three countries,” the group told Reuters.
If Mexico’s steel tariffs are not lifted, it is unlikely Mexico’s retaliatory tariffs on U.S. produce will go away anytime soon.
When I was working on coverage for Eastern apples, marketers said they were keen that Washington apple exporters have their full complement of export customers.
Retaliatory tariffs on U.S. apples from multiple countries related to U.S. tariffs on imported steel and aluminum could threaten to disrupt U.S. apple sales to Mexico, India and China.
“We are not a huge exporter, but we certainly rely on Washington state (shippers) to export their 40 million boxes a year,” said Jim Allen, vice president of marketing for New York Apple Sales, Glenmont, N.Y. “Any disruption of that will disrupt all markets, so that’s a huge risk.”
While the U.S. Department of Agriculture said it will make special purchases of well over $400 million in fruits and nuts to help U.S. growers hurt by retaliatory tariffs, not all are thrilled. Western Growers has said that the USDA programs “fall substantially short of compensating growers for damages they have incurred, and will continue to incur.”
The group cites a recent study from University of California-Davis economists that put direct trade losses for growers of 10 fruits and vegetables at $2.6 billion, and $3.3 billion when effects on the domestic market are also considered. That’s much more than $400 million-plus in commodity purchases.
The financial markets have responded with ecstasy after news of the U.S.-Mexico agreement, but many trade obstacles remain to restore a stable outlook for U.S. produce exporters.
Let’s hope President Trump is fully invested in the success of not only NAFTA 2.0, but also restoring favorable trade relations with other nations.
That’s a lot of heavy lifting for a president who seems most energetic when settling scores and setting the record straight with tweets.
Tom Karst is The Packer’s editor. E-mail him at [email protected].