Source: Chris Scott, MEATINGPLACE, 3/6/19


A new report on the potential effects on U.S. agricultural exports as Congress prepares to vote on the proposed U.S.-Mexico-Canada (USMCA) trade pact paints a grim picture if certain conditions occur.

Researchers at Purdue University’s Department of Agricultural Economics are predicting a significant decline in annual sales of U.S. agricultural products to Mexico and Canada under three of the four USMCA models they studied:
• First, it compares NAFTA with USMCA ignoring other trade policy changes that have been made. That analysis predicts a $454 million increase in U.S. net agricultural exports to Canada and Mexico concentrated in the dairy and poultry sectors.
• The second perspective adds the steel and aluminum tariffs the U.S. imposed on Canada and Mexico and the retaliatory tariffs imposed by Canada and Mexico. That analysis shows a net loss in U.S. agricultural exports of $1.8 billion.
• The third case includes all the other new U.S. tariffs and the retaliatory tariffs of other countries such as China. For this case, the loss in U.S. agricultural exports is about $7.9 billion.
• The conclusion from the final case is compiled from another study and represents an estimation of what would happen if NAFTA were to go away; e.g., Congress does not approve the USMCA and the President withdraws from NAFTA. The assumption is that tariffs in all three NAFTA countries would revert to most favored nation (MFN) status. The U.S. agricultural export loss in this case amounts to about $9.4 billion.

The Purdue study noted that NAFTA – in place for nearly 25 years – helped U.S. agricultural exports reach an average of $63 billion annually between 2013 and 2015. NAFTA also helped the share of U.S. agricultural exports destined to Mexico and Canada more than double from 14.2 percent to 29.8 percent between 1995 and 2017, the researchers reported. The analysis also found that Mexico and Canada were the largest sources of U.S. agricultural imports between 1995 and 2017.

U.S. lawmakers currently are discussing USMCA, although Republican and Democrat leaders reportedly are calling for significant changes in the provisional trade pact. President Trump last month called on legislators to quickly pass USMCA even as he continues to threaten to unilaterally withdraw from NAFTA.

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