Source: Tom Johnston, MEATINGPLACE, 8/27/18


The United States and Mexico today announced the two countries have forged a preliminary agreement that would replace the North American Free Trade Agreement (NAFTA), according to media reports.

President Trump said the U.S. would begin negotiations with Canada, NAFTA’s third party, to possibly include that country in the deal if its officials negotiate “fairly.” If not, he said he would impose tariffs on Canada’s cars, Bloombergreported.

That and other work is ahead, not least of which is ultimately getting congressional approval. But the “United States Mexico Trade Agreement,” as Trump said it will now be called, signaled some progress to agriculture and other industries that are feeling the financial effects of the Trump administration’s trade wars.

Optimism showed this morning in the meat markets, with October hog futures up as much as 3 cents per pound, which is the maximum allowed by the Chicago Mercantile Exchange, as reported by Bloomberg. Cattle also increased by the limit. Corn futures, meanwhile, rebounded from earlier losses to trade almost unchanged on the Chicago Board of Trade, according to Bloomberg.

Movement with Mexico on NAFTA, a 24-year-old pact that Trump has called the “worst” trade agreement in history and repeatedly threatened to scuttle over the past year, comes largely as the two sides settled the big sticking point of automobiles. Other issues remain that involve Canada as well.

Canada has been on the sidelines of the talks in recent months as trade tensions with Washington rose. But Canadian Foreign Minister Chrystia Freeland has said that her country would be “happy” to return to the table when the U.S. and Mexico progressed on their issues, the New York Times reported.

Meat industry interests have pushed for Trump to preserve those components of the deal that have been a boon to their constituents. When the president announced the NAFTA renegotiation last year, the National Pork Producers Council pointed out that in 2016 U.S. pork exports to Canada and Mexico were nearly $799 million and some $1.4 billion, respectively. And the National Cattlemen’s Beef Association said at the time that exports of American-produced beef to Mexico have grown by more than 750 percent since NAFTA was signed in December 1993.

Those same organizations also urged Trump back then to keep their exports free of tariffs. But Trump imposed tariffs on aluminum and steel from Mexico and Canada, among other nations, and those nations retaliated with hefty tariffs on hundreds of products, including beef and pork.

The U.S. Meat Export Federation estimates that Mexico’s tariffs could cost the U.S. pork industry $835 million over the next year, and the NCBA said Canada’s tariffs impacted $170 million worth of U.S. beef products.

Notwithstanding the tariffs and uncertainties that remain, Agriculture Secretary Sonny Perdue lauded the administration's progress with Mexico.

“This is nothing short of a great victory for farmers and ranchers, because locking in our access to Mexican markets is critical to supporting farm income and strengthening rural communities," he said in a statement. "Mexico has historically been a great customer and partner and we are happy to have this resolved for our agricultural producers.

“We now hope that Canada will see the need to settle all of the outstanding issues between our two nations as well, and restore us to a true North American Free Trade Agreement.”

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