By all appearances, the new normal for U.S. trade policy may be taking shape, and it isn’t pretty.
There is speculation in the media that President Donald Trump may want to negotiate separate trade deals with Canada and Mexico rather than try to hammer out version 2.0 of the North American Free Trade Agreement.
Since Canada, the U.S. and Mexico are bound together in the fresh produce supply chain so tightly, this is not welcome speculation. How soon would NAFTA disappear, and how long would it take to pen new bilateral deals?
Perhaps the reports are premature and, in fact, there will be a successful end to the efforts to modernize NAFTA.
At the same time NAFTA is in limbo, the U.S. slapped tariffs on steel and aluminum from Mexico, Canada and the European Union. And this week, Mexico slapped back with a 20% tariff on U.S. apple imports, among other retaliatory tariffs. Canada and the EU largely avoided new tariffs on U.S. fresh produce.
Worsening NAFTA dynamics come, of course, as the U.S. is grappling with China over a series of issues, including tariffs on Chinese steel and aluminum and China’s abuse of intellectual property rights. China also hit back where it hurts, targeting a variety of U.S. fruit and nut exports to China with an added 15% tariff.
President Trump seems to suffer from a short attention span. He wants results now, and if not, he is willing to risk long-term trade relationships to score political points and tweet his retorts to his critics.
And in late May, India notified the World Trade Organization that it intends to slap a retaliatory tariff on U.S. apples in response to America’s tariffs on steel and aluminum from India. The proposed 30% tariff is expected to be applied by June 21.
Whereas trade policy in previous administrations percolated boringly along with multi-year negotiations on trade deals, President Trump seems to suffer from a short attention span. He wants results now, and if not, he is willing to risk long-term trade relationships to score political points and tweet his retorts to his critics.
In regard to protecting trade relationships, it seems industry advocates have been left to hope that the president’s trade team has cooler heads and that they somehow will prevail.
Whether Trump’s team of trade officials actually fit that bill is impossible to say. Agriculture Secretary Sonny Perdue is an effective leader of the USDA and tireless traveler to farm country, but is he bending the ear of Trump on the importance of NAFTA to any degree at all?
President Trump began his term by serving notice that the U.S. would withdraw from the Trans-Pacific Partnership, and it has gone downhill from there.
While it is easy to doubt the soundness of Trump’s approach to trade, it would not surprise me if he were somehow be able to create deals so rich that they will endear him to the farm community forever.
Trump is so unpredictable and unconventional that his “ready, fire, aim” approach to issues somehow might just work. Here’s hoping, anyway.
Tom Karst is The Packer’s national editor. E-mail him at [email protected].
UPDATED: Mexico adds 20% tariffs on U.S. apples, cranberries
UPDATED: Fruit exporters hit with more retaliatory tariffs
Ag leaders caution on latest Trump tariff push against China
India threatens U.S. apples with tariff