Sector News

Trump threatens to impose tariffs on goods from Mexico

June 4, 2019
Food & Drink

President Donald Trump on May 30 announced his intent to impose a 5% tariff on all imported Mexican goods starting June 10 in response to illegal immigration at the U.S.-Mexico border.

Many U.S. ag associations believe this action threatens approval of the U.S.-Mexico-Canada Agreement (U.S.M.C.A.).

“As organizations that strongly and unequivocally support speedy ratification of the U.S.-Mexico-Canada Agreement (U.S.M.C.A.), the N.G.F.A. and N.A.E.G.A. commend the Trump administration for forwarding the draft Statement of Administrative Action to Congress on May 30, thereby clearing another important procedural step to eventual congressional consideration of the accord,” the National Grain and Feed Association and North American Export Grain Association said in a joint statement. “But we are concerned about the prospect of the imposition of new U.S. tariffs against Mexico. The imposition of such tariffs unquestionably will jeopardize ratification of this crucial trade accord that would bring about more normalized and predictable two-way trade with the United States’ top trading partners, which is vitally important to U.S. agriculture, the American economy and job creation, particularly given the current trade disruptions with China.”

With Mexico being a major export outlet for U.S. corn the National Corn Growers Association (N.C.G.A.) said it would like to see the U.S.M.C.A. communications progress continue, not stagnate.

“N.C.G.A. strongly urges the president to rethink applying new tariffs to Mexican goods and to reconsider using tariffs to address non-trade issues,” said Lynn Chrisp, president of the N.C.G.A. “Corn farmers want to continue working with the administration and Congress to ratify the new U.S.-Mexico-Canada Agreement and pursue new trade agreements. The recent deal to lift steel and aluminum tariffs on Mexico and Canada was an important breakthrough for U.S.M.C.A. but new tariffs threaten to reverse that progress. Amid a perfect storm of challenges in farm country, we cannot afford the uncertainty this action would bring.”

According to the N.C.G.A., Mexico was the top market for U.S. corn in 2017-18, with corn and corn product exports valued at $3.3 billion. Corn exports to Mexico reached a record high of 15.7 million tons (618 million bushels), up nearly 13% from 2016-17.

“At such a critical time for U.S. farmers, new talk of tariffs on Mexican products challenges the complex relationship we have with the top international buyer of U.S. grains and related products,” said Tom Sleight, president and chief executive officer of the U.S. Grains Council. “We agree continued negotiations are the correct path to ensure stability in our markets, particularly as South American corn becomes a viable option for Mexican customers. As this political and market situation develops, we will remain in close touch with our stakeholders here at home and in Mexico to help maintain the stability of our longstanding partnership.”

The U.S. Wheat Associates and the National Association of Wheat Growers showed concern for how the tariffs may impact the U.S.M.C.A. on top of what the U.S. wheat industry has endured weather-wise this spring.

“We call on the president to rescind this threat immediately,” said Ben Scholz, president of NAWG. “We’ve been hit by low prices; we’ve been hit by rain and flooding that is hurting what was an excellent wheat crop; and now we’ve been hit again by the actions of our own government. We need to end indiscriminate use of tariffs now, one way or another.”

The associations called for a speedy agreement for both countries trade and within North America.

“We strongly urge U.S. and Mexican officials to immediately begin good-faith discussions to urgently arrive at mutually agreeable steps to restore desperately needed confidence and certainty to agriculture and other industries and job-creators that depend upon vibrant trade and efficient supply chains that benefit North American and global consumers,” the N.G.F.A. and N.A.E.G.A. said.

By Holly Demaree-Saddler

Source: Food Business News

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