#mexican tariffs

By Kevin Sieff, Washington Post, June 5, 2018

MEXICO CITY--This week, days after announcing tariffs on aluminum and steel that affected Mexico and Canada, President Trump went after the two countries again on trade. This time, he claimed that the U.S. agriculture industry has suffered thanks to “big trade barriers against U.S. farmers.”

But an examination of U.S.-Mexico agricultural ties reveals a very different picture.

Since NAFTA took effect in 1994, U.S. agricultural exports to Mexico have quintupled. In the past 10 years alone, they increased from $12.7 billion to $18.6 billion, according to the United States Department of Agriculture.

The USDA’s website offers a blunt contradiction of Trump’s claim: “Under the North American Free Trade Agreement (NAFTA), Mexico and the United States have eliminated all tariffs and quantitative restrictions on agricultural goods.”

Trump’s comments about trade with Mexico come at a fragile moment in bilateral economic relations. On Monday morning, Mexico announced that it would take the United States to the World Trade Organization over its steel and aluminum tariffs, which Mexico’s economy ministry said are illegal under international trade rules. The White House has said the tariffs were imposed to protect national security.

Meanwhile, with NAFTA negotiations at an impasse, American and Mexican businesses are growing nervous. Analysts say Trump’s tweet is likely to increase anxiety across both agricultural industries, suggesting that one of the world’s most important commercial relationships could be further strained.

Trump’s tweet refers to “massive trade deficits.” In 2016, the United States exported $18.7 billion in agricultural products to Mexico and imported $23.8 billion, a deficit of $5.1 billion. Trade economists say there’s a good reason for that deficit, and it doesn’t have anything to do with trade barriers.

“The trade deficit is increasing because we’re coming out of a recession and people are consuming more things in the United States,” said Kathy Baylis, an associate professor of agricultural economics at the University of Illinois. “We like eating fresh strawberries and avocados in winter”--two products imported from Mexico.

The commercial relationship between the United States and Mexico is often mischaracterized as being one-directional--with Mexican avocados and consumer products shipped north. In fact, Mexico consumes an enormous amount of American agricultural products. Today, the United States supplies three-quarters of Mexico’s agri-food imports, according to the U.S. Chamber of Commerce.

Mexico consumes so much American grain that it helps keep U.S. corn and soybean producers afloat. Earlier this year, in the midst of uncertainty around NAFTA negotiations, Mexico shocked American farmers by dramatically increasing its imports of corn from Brazil.

“The American farmers are nervous,” said Luis Ribera, a professor of agricultural economics at Texas A&M University. “When you lose market share, it’s very difficult to get it back.”

In the wake of last week’s tariff announcement, Mexico announced that it would apply its own retaliatory tariffs on a number of agricultural products, including some fruit, vegetables and meat. U.S. producers quickly expressed concern. Mexico is the United States’ largest export market for pork; it purchased $1.5 billion of American pork last year.