U.S. Mexico Canada Agreement

Farmers Need the Certainty Provided Under USMCA More Than Ever, Lawmakers Say

Tue, 25 Nov 2025 15:31:32 GMT

The benefits of the United States-Mexico-Canada Agreement (USMCA) are hard to deny. Kenneth Smith Ramos, a former lead negotiator for the Mexican government who was deeply involved in the negotiation and ratification of USMCA, discussed the mutual benefits USMCA has delivered for the agricultural sectors in both the U.S. and Mexico during the recent USMEF Strategic Planning Conference. Not only has the agreement enhanced food security in both countries, but he said it has also bolstered the profitability of many agricultural sectors through free trade.

The U.S., Canada and Mexico are scheduled for a joint review of the trade agreement in July. Smith, who is now a partner in the regulatory and trade consulting firm AGON, says the possible outcomes of the USMCA review range from a very limited review to the threat of “rupture” if the agreement is reopened and the U.S. threatens to withdraw. He said he anticipates something in between, with portions of USMCA – some of which may be contentious – opened up for renegotiation.

“We see a complex USMCA review, but we do not see a scenario where there is an imminent collapse of the agreement,” Smith said during the conference. “There will be turbulence, but we do not see the plane crashing.”

Smith added that it is critical for the U.S., Mexican and Canadian agricultural sectors to remain vigilant in explaining the benefits of USMCA and the importance of maintaining it as a trilateral pact.

Much Needed Certainty

Congressional Agriculture Trade Caucus cochairs Reps. Jim Costa (D-CA), Dusty Johnson (R-SD), Jimmy Panetta (D-CA), and Adrian Smith (R-NE) led more than 100 members of the House of Representatives in urging the Office of the U.S. Trade Representative to “carefully” examine changes to USMCA.

“USMCA was truly a landmark agreement for American Agriculture when it entered force, and its positive impact on U.S. agriculture has yet to reach its maximum benefit,” the members wrote. “At a time when economic challenges threaten the livelihood of family farms, producers need the certainty provided under USMCA more than ever.”

In the Nov. 20 letter to USTR Ambassador Jamieson Greer, the lawmakers said the outcome of the review should advance American agriculture and food production. They asked the trade agency to “work closely with Congress and consider the significant positive impact North American trade has on our communities. Any changes to the agreement should be carefully examined to ensure U.S. agriculture is not negatively impacted.”

Lawmakers pointed out that USMCA streamlined compliance measures and harmonized regulations, thereby generating cost savings for U.S. farmers, producers, and ranchers. In 2024, the U.S. was the world’s largest agricultural exporter, with total ag exports valued at $176 billion.

“The agriculture section of the USMCA provides much needed certainty within North America through its tough and effective rules on sanitary and phytosanitary measures, agricultural biotechnology, intellectual property, and technical barriers to trade,” the letter said. “U.S. agricultural exporters depend on the binding nature of these provisions to access our closest markets and make sales, which has directly benefited the farmers, ranchers, and producers that we represent. Further, these rules-based, science-driven commitments set a strong example for other trading partners hoping to achieve similar access to the U.S. market.”

Earlier this month, the National Pork Producers Council and more than 125 agriculture and food organizations also urged USTR to be cautious in making changes to USMCA, which they said has facilitated and streamlined the flow of commerce throughout the three countries. The positive impact USMCA has had on U.S. agriculture, they added, “has yet to reach its maximum benefit. At a time when economic challenges threaten the livelihood of family farms, producers need the certainty provided under USMCA more than ever.”

“U.S. pork producers export over 25% of their pork,” NPPC noted in Capital Update. “With Mexico and Canada as their first and fourth largest export markets, respectively, USMCA has provided continuity and removed market uncertainty in those markets.”

Gregg Doud, president and CEO of the National Milk Producers Federation pointed out that USMCA has delivered real value for America’s dairy farmers.

“While several dairy compliance issues remain to be addressed in the 2026 Joint Review, the duty-free trade into Mexico that USMCA preserved has allowed U.S. dairy exporters to partner with Mexico to meet growing demand,” Doud said.

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No Trade Agreement Can Boast the Success of USMCA, The Meat Institute Says

No Trade Agreement Can Boast the Success of USMCA, The Meat Institute Says

Mon, 03 Nov 2025 21:13:19 GMT

The Meat Institute is calling on the Trump administration to renew the U.S.-Mexico-Canada Agreement (USMCA) for its benefits to American meat and poultry companies and the entire U.S. animal protein value chain.

“USMCA has been a boon for the American meat, livestock and poultry sector, along with the broader American food and agriculture economy and ancillary industries,” said Julie Anna Potts, The Meat Institute president and CEO, in a news release. “It has provided steady income to American farmers, ranchers, and meat and poultry exporters; it has created jobs for American truck drivers, ports, and transportation companies; it has strengthened American food retail and food service establishments; and it has accomplished all of this through transparent rules that allow American businesses to proactively plan supply chains and develop durable customer relationships.”

USMCA entered into force on July 1, 2020, substituting the North America Free Trade Agreement (NAFTA) to create more balanced, reciprocal trade supporting high-paying jobs for Americans and grow the North American economy, according to the Office of the United States Trade Representative (USTR) .

“The domestic U.S. meat and poultry industry’s long-term economic viability, though, depends on robust international trade, particularly as domestic per capita consumption of meat and poultry remains stable, and 95% of consumers live outside the U.S,” The Meat Institute wrote in comments submitted to the USTR on Nov. 3. “International trade is, therefore, vital to the long-term strength of the U.S. meat and poultry industry, the American workers it supports, and the rural and farm communities it sustains.”

In 2024, U.S. meat and poultry exports exceeded $24.6 billion. Meat and poultry product exports to Canada and Mexico accounted for $7.5 billion of that total. Annually, approximately 14% of U.S. beef production, 15% of U.S. poultry production and 25% of U.S. pork production are exported, the organization noted. As well, exports add value to every animal produced, and in turn, increase demand for U.S. corn and soybeans.

“The Trump Administration’s America First Trade Policy Agenda has reinvigorated American trade policy and has reasserted American leadership to advance U.S. meat, poultry, food, and agriculture trade in a manner that revitalizes our farm communities and supports broad-based economic growth. President Trump’s negotiation of the USMCA during his first term resulted in the world’s gold-standard trade agreement,” the letter said. “Thanks to President Trump’s leadership, USMCA has bolstered U.S. meat, poultry, and livestock trade, has led to increased market integration in North America, and must be preserved without significant changes that would disrupt the U.S. meat and poultry industry’s substantial access to the Canadian and Mexican markets.”

The Meat Institute says it’s clear USMCA’s access terms – zero tariffs on most meat, poultry and livestock trade – have underpinned American economic and job growth, particularly in rural and farm communities across the U.S.

“No other trade agreement can boast the same success,” Potts said. “President Trump deserves enormous credit for this extraordinary achievement.”

See The Meat Institute’s full comments in response to the U.S. Trade Representative’s (USTR) “Request for Comments on the Operation of the Agreement Between the United States of America, the United Mexican States, and Canada.”

Tariff Uncertainty: Challenges and Opportunities Ahead for Agriculture

Fri, 04 Apr 2025 13:43:21 GMT

The exclusion of products compliant with the United States-Mexico-Canada Agreement (USMCA) helps soften the blow of the sweeping reciprocal tariffs President Donald Trump announced on Wednesday , but reaction has been mixed.

The nation’s soybean farmers are concerned about the Trump administration’s tariff plan and possible retaliation from China, their largest customer, says Caleb Ragland, a Kentucky farmer and president of the American Soybean Association (ASA),

“Exports are right at 50% of our markets, so we use half of the soybeans produced in the United States domestically, and the other half are exported,” he says.

Soybean producers are still dealing with the fallout from the trade war in 2018, and they say tariffs make them less competitive, causing customers to shift to other sources.

“We were exporting one third of the U.S. soybean crop to China before the previous trade war,” Ragland says. “Last marketing year, we exported about 24% of our production.”

Soybeans prices are down 40% from three years ago and the cost of production is high, he adds, so farmers can’t withstand another trade war.

Like soybeans, market access and exports are important to the corn sector, with 15% of U.S. corn exported overseas, says Kenneth Hartman Jr., president of the National Corn Growers Association and an Illinois farmer.

“Trump is a negotiator. We’re hoping the President, through this process, can come out where we can actually see more products going into exports, and hopefully that will drive higher prices,” he says.

Referencing USMCA, Hartman says the agreement, negotiated by Trump during his first term as president, has been beneficial for corn growers because Mexico is now the No. 1 market for U.S. corn and Canada is the No. 1 market for ethanol.

“We have some great trade partners, and we want to keep them,” he adds. “We’re hoping under these negotiations, everybody takes that into consideration.”

The National Cattlemen’s Beef Association (NCBA) welcomes President Trump’s move as a way to slow beef imports and level the playing field in world markets, citing Vietnam’s 30% tariff on U.S. beef, Thailand’s 50% tariff and even Australia’s $29 billion in beef sales to the U.S.

“They have played games, they have stonewalled and they have come up with endless non-science-based reasons to not reciprocate access for our producers into their market,” says Ethan Lane, senior vice president of government affairs for NCBA.

Creek’s up this morning!

As an American rancher I’m pleased we can start to see fair trade! We raise a quality product and the people of America deserve to know where their beef comes from!
Let’s get Country of Origin Labels on our product now that we’re getting tariffs fixed🇺🇸 pic.twitter.com/79Mz0PA1OD
— Cattleman🪓 (@cattleguy92) April 3, 2025

Lane, who attended the Rose Garden announcement, says they’re in the camp of short-term pain for long-term gain with tariffs a negotiating tool for better trade deals.

“While we’re not a big fan of tariffs, generally, we do think what the president is trying to do using this tool could achieve some real benefits for U.S. cattle producers as far as being treated more fairly in those foreign markets,” Lane says.

Will Farmers Receive Aid to Offset Tariff Impact?

One question that remains: Will farmers be compensated if tariffs impact their bottom line?

Agriculture Secretary Brooke Rollins said on Fox News on Thursday the Trump administration is “months away” from deciding to make payments to farmers to offset any impact from tariffs.

In the case of any economic loss from tariffs, Rollins has said the administration would consider making payments to farmers , which occurred during Trump’s first term as president when he compensated farmers to offset losses from a trade war with China.

From fertilizer to machinery, everything I, as a farmer, need to stay afloat will now be more expensive.......we can expect the same retaliation we saw during the last trade war—foreign tariffs aimed squarely at the United States' soft underbelly - which is American farmers and… pic.twitter.com/mb1VQwOG2I
— Christopher Gibbs (@ChrisRGibbs) April 2, 2025

Are They Really Reciprocal Tariffs?

Meanwhile, market analysts say the announced tariffs are not by definition reciprocal.

“It turns out what they’ve really done is taken the gap in goods, the amount of traded goods we get from a country and the amount of goods that country gets from us, and when there’s a deficit, they do some math and come up with the tariff rate,” says Kent Beadle, DTN market analyst. “So it’s certainly not reciprocal.

On Thursday, most ag markets had a negative reaction on fear of retaliation, leaving many to wonder how long it will take for markets to stabilize?

“I think if we continue to see strong export sales … a lot of this might start to fade away a little bit,” Beadle adds.

A silver lining is a lower U.S. dollar index can offset some of the blow of tariffs, he says.

How Will U.S. Trading Partners React?

Based on history, Dan Basse, AgResource Company president, says if tariffs are in effect longer than a quarter or two — three to six months — they tend to stick around.

“Look back to 2018 and what Trump put on China, it’s still in place today and stayed through the Biden administration,” Basse says. “The message is, if you’re an importing country, try to get [the tariff] off as fast as you can. Negotiate your way out of it, because once the United States starts to enjoy the income flow, it’s hard to get them off of that position. That’s why I say, I think we’ll know in the next three to six months where this all goes and if Trump really is the negotiator and deal maker we hope he is. If it’s longer than six months, I’m afraid these tariffs are going to be with us for quite a while, and that’s probably not good for industry or agriculture.”

Here’s a list of several U.S. trading partners and how Basse thinks the tariffs might affect trade going forward.

Canada: “They just put 25% tariffs on U.S. auto, which was expected. I don’t think there’ll be any additions based on what happened [Wednesday]. We kind of had Mexico and Canada get a free pass for a while. For agriculture, I think this was a really big deal, and the reason the corn and wheat markets didn’t sell off. China’s out there, and that’s a bean story, which is why beans fell hard. The grains held together, though, and I think it’s because of Trump’s willingness to look at USMCA and say, OK, for now, we’re going to keep it where we’re at.

“I really do think [Canada] should take it as a win. I was just up there in Edmonton doing meetings, and I know the hostility toward America at the moment, but I still believe with the new prime minister and the direction Trump gave us yesterday, it was a win, and there’s still ability to work together.”

Europe: “I think Europe is going to come out with guns blaring. I believe they’re angry. I believe the countries have come together a little bit like Canada, on a nationalistic standpoint against the United States, so look for some hostility toward us. The EU has shipped most of its corn, so we’re happy about that. But going forward, I don’t see the EU market as being important again, unless there can be some negotiation, some solution going forward.”

Brazil: “I think the Brazilians biggest concern is the value of the real. The real sank [on Thursday] to 560, which is down a bunch. As the dollar continues to weaken and the real rallies, that’s a win for U.S. agriculture. I believe the dollar is the key going forward, so as I’m watching it, if indeed the tariffs produce a liquidation of dollar holdings, that’s not bad for American agriculture, and it could really slow the expansion down in Brazil.”

Australia: “We get roughly 32% of our grind [hamburger] from Australia. The fast-food chains love Australian beef because of its lower fat content. With the tariffs, I think we’re going to be paying more for our lean beef grind.

“The restaurant chains I’ve been talking to are concerned about trying to source such lean hamburger in the United States.

“I think [tariffs] are a win for the U.S. cattle industry in general. What is concerning is the economic impact and what U.S. consumers will do. I do believe recession chances have doubled since the tariff announcements, and we are going to see firms laying people off and trying to understand margins going forward. That’s not helpful. But how we balance trade and domestic demand will be key for the beef market and the cattle market over the next couple of months.”

Russia: “I think [President Vladimir Putin] is going to keep marching with the war. He’s going to be difficult to deal with. The ruble is strengthening, giving them a little more fortitude. I imagine the Russian farmers are not happy about [the reciprocal tariffs], and maybe they won’t plant as much grain going forward. But other than that, I think it will be status quo, and [Putin] is kind of teaming up, if you will, with China and that BRIC alliance to somehow show their strength against the United States.”

Vietnam: “They’re an important importer of world corn. My question is, will the Trump administration use tariffs to somehow boost U.S. export of grains to Vietnam, or is this really just a tactic to raise revenue? I think that’s key in the next three or four months. Is there some negotiating position such that it benefits U.S. agriculture?

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Mexico's President Says the Country Won't Retaliate with More Reciprocal Tariffs on U.S. Products

Wed, 02 Apr 2025 18:06:08 GMT

In what President Donald Trump is calling Liberation Day, the White House plans to officially roll out a plan to combat what he calls unfair trade policies in an effort to bring industrial jobs back to the U.S., the other major unknown is how other countries will retaliate. On Wednesday, the United States’ top trading partner announced it won’t go toe to toe with the president on trade.

Mexican President Claudia Sheinbaum says Mexico won’t retaliate with a long list of reciprocal tariffs. In her daily morning press conference, Sheinbaum says instead, Mexico will “announce a comprehensive program, not a tit for tat on tariffs” on Thursday. She adds Mexico’s leadership is still waiting to see what exactly Trump announces on Thursday, but added “we have a plan to strengthen the economy under any circumstance.”

Trump is slated to hold a press conference at 4 p.m. EST at the White House, saying “It’s going to make our country rich again .... We’re basically going to take back the money — a lot of the money that we’ve given away over many decades.”

President Trump has been calling attention to the disaster falsely marketed as "free trade" for decades.

In reality, foreign countries have gotten rich at the expense of the American worker.

Today, he finally levels the playing field. 🇺🇸 pic.twitter.com/XS0ZAiZS6p
— Rapid Response 47 (@RapidResponse47) April 2, 2025

Can Mexico Afford to Retaliate?
As AgWeb reported in March , the question leading up to April 2 was not only what the president would ultimately decide to do, but also if countries like Mexico could even afford to retaliate.

Here’s why. According to the Federal Reserve Bank of Dallas, Mexico’s GDP grew only 0.9% year over year in fourth quarter 2024, after expanding 2% in 2023 and 4.6% in 2022. Economic growth slowed, mainly due to lower investment, slowing consumption and a contracting energy sector.

The other issue? Mexico is extremely reliant upon demand from the U.S., exporting $41.9 billion worth of agricultural products to the U.S.

In 2023, Mexico accounted for 16.3% of U.S. agricultural exports and 23.3% of U.S. agricultural imports.

By the numbers:

Mexico is the largest source of horticultural imports to the U.S., supplying 63% of vegetables and 47% of fruit and nuts in 2023.
The top agricultural exports from Mexico to the U.S. in 2024 included beer, tomatoes, tequila, avocados, strawberries, raspberries and peppers.

Another important piece is Mexico is now the top ag export destination for the U.S.

According to Krista Swanson, chief economist for National Corn Growers Association (NCGA), Mexico is a huge destination for U.S. corn. More than 40% of U.S. corn exported last year went to Mexico. Not only does that mean the U.S. relies on Mexico, but Mexico is also reliant upon the U.S. due to the strong demand.

“That’s the other key piece here when we think about a Mexico situation, you know, will they retaliate on corn because it’s so important to the consumers in their country,” Swanson told Farm Journal during Commodity Classic this week. “And it’s such a big part of their diets and consumption. It’s a commodity that they consume way more of than what they produce. So they’re going to have to get it from somewhere.”

According to USDA’s Economic Research Service , between 1993 (the year before NAFTA’s implementation) and 2023, U.S. agricultural exports to Mexico expanded at a compound annual growth rate (CAGR) of 7%, while agricultural imports from Mexico grew at a rate of 9.7%.

“With the economic recovery in the United States and Mexico that followed the pandemic, U.S. agricultural exports to Mexico increased at a CAGR of 15.7% between 2020 and 2023, and U.S. agricultural imports from Mexico grew at a CAGR of 11.3%,” according to the USDA report. “In 2023, however, U.S. agricultural exports to Mexico decreased by 0.3% compared with the previous year, as the prices of major agricultural exports (such as corn and soybeans) declined.”

‘Farmers for Free Trade’ Speaks Out
Trump will announce his full plan at 4 p.m. EST on Wednesday, and Farm Journal will continue to follow this story as it evolves.

Ahead of Wednesday’s announcement on global tariffs, Farmers for Free Trade Executive Director, Brian Kuehl released a statement condoning the president’s use of tariffs.

“Farmers don’t want tariffs. In the midst of an already struggling farm economy, new tariffs threaten to raise input costs, close off key markets, increase uncertainty—and push more family farms to the brink of bankruptcy,” said Kuehl in a statement.

However, not all farmers agree with that. Iowa farmer Ben Riensche is hoping getting tough on trade will address the record ag trade deficit.

“We’re going to go through an adjustment period. We’re going make things a little less than comfortable for a while here while we make our trade partners be fair trading partners. It could be hard in the short term on farmers,” Riensche says.

You can read more about Rienche’s take on trade here.

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Farmers Who Stand Strong With Trump on Tariffs Say Long-Term Gain is Worth Short-Term Pain

Take Our Poll: Do You Agree With President Trump's Use of Tariffs?

Wed, 19 Mar 2025 17:07:06 GMT

Tariff whiplash is consuming the commodity markets — and the possible impact is stirring up quite the debate. At present, President Donald Trump says he’s sticking to his plan to impose additional tariffs on the United States’ top three trading partners starting April 2.

In early February, President Trump announced a 25% additional tariff on imports from Canada and Mexico , a 10% additional tariff on imports from China and a 10% tariff on energy resources from Canada.

Those tariffs were scheduled to go into effect in early March. However, President Trump made the decision to exempt goods from Canada and Mexico under the U.S.-Mexico-Canada Agreement (USCMA) from the 25% tariffs for another month.

What we know today is those exemptions for goods from Canada and Mexico covered under USMCA are scheduled to expire on April 2.

As agriculture waits to see what happens, the commodity markets continue to trade headlines and concerns are mounting about possible retaliatory tariffs. Tariff talk is already impacting input prices for farmers heading into spring.

Share Your Thoughts on Tariffs
In light of the ongoing tariff battle, we have two questions for you:

Do you support President Donald Trump’s use of tariffs as a negotiation strategy?
Do you believe USDA will compensate farmers for losses if agriculture is affected by a trade war, similar to the compensation provided through the Market Facilitation Program?

Click here to share your answers.

NOTE: We appreciate your input. The poll has been closed. Check back on Monday, March 24 for results and analysis.

January Beef Exports Above Year-Ago with Pork Trends Modestly Lower

Tue, 11 Mar 2025 19:34:07 GMT

U.S. beef exports trended higher than a year ago in January, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Pork exports were slightly below last January’s large totals, despite another outstanding performance in Mexico and Central America.

USMEF President and CEO Dan Halstrom shares that continued momentum from late 2024 and a good month for beef increased volume.

“Volume was up 3% overall and value up a little over 5%,” Halstrom says.

Key markets contributing were Korea, China and Canada.

“Central America had a 24% increase during the month on the value side,” Halstrom adds.

He puts a cautionary note on the China numbers.

“While the business has been good the last half of 2024 and good here in early 2025, we do have a large pending issue on plant eligibility in terms of registrations,” he says. “Several U.S. plants have scheduled for renewals on March 16, which is unusual to have them not renewed yet.”

Beef variety meets had large growth in both Mexico and Egypt, Halstrom says as another positive.

USMEF reports January beef exports reached 102,840 metric tons (mt), up 3% year-over-year, while value increased 5% to $804.6 million.

Pork exports totaled 243,965 mt in January, down 3% from a year ago, while value eased 2% to $668 million.

“Mexico set records the last two years, actually, and the month of January was our fourth largest export month ever on pork,” Halstrom says. “Central America had a huge month with volume up 22% and value up 30%.”

Exports also increased year-over-year to China/Hong Kong, the Philippines, Australia and New Zealand, but these results were offset by sharply lower shipments to Japan, Korea and Colombia, USMEF reports.

“A lot of these record-breaking growth countries have some sort of duty-free access through free trade agreements,” Halstrom says. “You’ve got Mexico and Canada on the USMCA side. You have Korea with their free trade agreement and Columbia-DR. I don’t think it’s any coincidence that these are all markets where we have a preferential access. We do have to protect these longstanding relationships with these key trading partners.”

A detailed summary of the January export results for U.S. pork, beef and lamb, including market-specific highlights, is available from the USMEF website.

Can Mexico Afford to Retaliate Against the U.S.?

Wed, 05 Mar 2025 19:46:39 GMT

President Donald Trump followed through on his threats of imposing a 25% tariff on most imports from Canada and Mexico, along with an additional 10% on goods from China. While China and Canada released their list of retaliatory tariffs the same day, Mexico’s president, Claudia Sheinbaum, says they won’t release their list until the weekend.

Sheinbaum said the country will also respond with a 25% tariff on U.S. goods but will announce the products it will target on Sunday.

But can Mexico afford to retaliate? That was one of the questions asked by USDA chief economist Seth Meyer during Commodity Classic this week. The reason is Mexico’s economy is struggling, due to a number of factors, which includes a large informal sector, high budget deficit and unstable infrastructure.

According to the Federal Reserve Bank of Dallas, Mexico’s GDP grew only 0.9% year over year in fourth quarter 2024, after expanding 2.% in 2023 and 4.6% in 2022. Economic growth slowed, mainly due to lower investment, slowing consumption and a contracting energy sector.

(Federal Reserve Bank of Dallas)

The Dallas Fed says lower investment and consumption was the main driver behind the slow growth.

“Investment contributed three percentage points less to GDP growth in 2024 compared with 2023,” the Federal Reserve Bank of Dallas said in a recent report. “The major drop was in nonresidential construction investment, while purchases of imported machinery and equipment also slowed noticeably as the Mexican peso continued to weaken against the dollar. In addition, consumption was impacted by sluggish growth in remittances, high interest rates and flat employment. However, net exports boosted growth in 2024 after dragging it down the previous two years.”

Extremely Reliant Upon Exports
The other issue? Mexico is extremely reliant upon demand from the U.S., exporting $41.9 billion worth of agricultural products to the U.S.

In 2023, Mexico accounted for 16.3% of U.S. agricultural exports and 23.3% of U.S. agricultural imports.

By the numbers:

Mexico is the largest source of horticultural imports to the U.S., supplying 63% of vegetables and 47% of fruit and nuts in 2023.
The top agricultural exports from Mexico to the U.S. in 2024 included beer, tomatoes, tequila, avocados, strawberries, raspberries and peppers.

Mexico is the Biggest Customer of U.S. Ag Exports

The other important piece is Mexico is now the U.S.'s top ag export destination.

According to Krista Swanson, chief economist for National Corn Growers Association (NCGA), Mexico is a huge destination for U.S. corn. More than 40% of U.S. corn exported last year went to Mexico. Not only does that mean the U.S. relies on Mexico, but Mexico is also reliant upon the U.S. do to the strong demand.

“That’s the other key piece here when we think about a Mexico situation, you know, will they retaliate on corn because it’s so important to the consumers in their country,” Swanson told Farm Journal during Commodity Classic this week. “And it’s such a big part of their diets and consumption. It’s a commodity that they consume way more of than what they produce. So they’re going to have to get it from somewhere.”

Bigger Picture
According to USDA’s Economic Research Service , between 1993 (the year before NAFTA’s implementation) and 2023, U.S. agricultural exports to Mexico expanded at a compound annual growth rate (CAGR) of 7%, while agricultural imports from Mexico grew at a rate of 9.7%.

“With the economic recovery in the United States and Mexico that followed the pandemic, U.S. agricultural exports to Mexico increased at a CAGR of 15.7% between 2020 and 2023, and U.S. agricultural imports from Mexico grew at a CAGR of 11.3%,” the USDA report said. “In 2023, however, U.S. agricultural exports to Mexico decreased by 0.3% compared with the previous year, as the prices of major agricultural exports (such as corn and soybeans) declined.”

Industry Comments on Retaliatory Tariffs on U.S. Pork and Beef

Tue, 04 Mar 2025 19:41:53 GMT

U.S. tariffs on imported goods from Canada, Mexico and China went into effect March 4, with retaliatory tariffs being announced as well.

China is imposing 10% on U.S. pork and beef, along with soybeans, sorghum, aquatic products, fruits and vegetables and dairy imports beginning March 10.
Canada looks to implement a 25% tariff on American goods beginning immediately. The Canadian government will be consulting the public and stakeholders for a second round of tariffs , which will include fruits and vegetables, beef, pork, and dairy among other products.
Mexico’s president, Claudia Sheinbaum, shared in a press conference she would announce tariffs against the U.S. on Sunday, March 9.

According to the U.S. Meat Export Federation (USMEF), total U.S. red meat exports in 2024 was $19.1 billion. Mexico, China and Canada add up to 8.4 billion of the total, about 40%.

Dan Halstrom, USMEF President and CEO, says we could be in for a bumpy ride, but this is not something exporters can’t overcome.

“Nobody likes to see tariffs in terms of our business and the threat of the retaliation back,” Halstrom says. “In terms of the overall impact, it’s tough to know. I happen to think this is a very fluid situation. It could change at a moment’s notice. I think the important thing to remember is that just because there’s tariffs doesn’t mean the trade stops.”

According to the latest USMEF Export Report , U.S. beef exports equated to more than $415 per fed steer or heifer slaughtered and pork exports equated to more than $66 per head slaughtered.

“As is the case with all of our markets, we’re utilizing the whole carcass,” Halstrom says. “There’s a big focus on variety meats, both beef and pork, which aren’t the most utilized cuts. Round meat is huge into Mexico. Half of our hams are exported and mainly go to Mexico.”

While Halstrom says there are concerns for retaliation and also competing with other countries like Brazil that are zero duty, he says we have to remember the quality of product the U.S. exports.

“I do think the other thing that we have definitely in our favor is that demand for our products globally is record breaking,” Halstrom says. “It’s as good as I’ve ever seen it in 40 plus years. We have a very unique product. We have to keep that in mind because that’s a big leverage point.”

Christine McCracken, Rabobank’s executive director of animal protein, shares an outlook for U.S. pork producers.

“There may be some additional relief on feed costs assuming tariffs slow exports of corn and beans,” McCracken says. “Lower feed costs are likely to be offset with higher costs of equipment and building materials, although the industry has telegraphed the likelihood of these increases which will likely limit their immediate impact. Weaned pig prices have also moved higher and could see additional upside, weighing on producer returns.”

She adds that import tariffs will have a limited impact on the industry, whereas retaliatory tariffs on US pork will weigh on the cutout and hog prices.

“With nearly 30% of US pork exported annually, any slowdown in export volumes would have a ripple effect on the entire industry,” McCracken says. “Producers and packers should remain nimble, communicate with their bankers regularly, conserve cash and avoid building inventory.”

In a statement shared with Drovers, NCBA Executive Director of Government Affairs Kent Bacus says, “Tariffs are an important tool in trade negotiations and can be effective when used strategically to accomplish our goals. President Trump understands this, and he kept farmers in mind when he successfully negotiated the trade deal with China and the United States-Mexico-Canada Agreement.”

Bacus added President Trump is using tariffs to address concerns with fentanyl, migration and trade imbalances.

“We are hopeful that the scope and duration of tariffs will be limited to avoid impacts to consumers and ranchers that may result from ensuing supply chain disruptions,” he says. “We encourage President Trump to focus his tariff strategy on removing trade barriers and supporting more opportunities for U.S. farmers and ranchers to sell their high-quality beef abroad.”

Trump Sows Confusion on Tariffs for Canada and Mexico, Floats 25% Duty for EU Goods

Wed, 26 Feb 2025 21:25:23 GMT

U.S. President Donald Trump on Wednesday raised hopes for another month-long pause on steep new tariffs on imports from Mexico and Canada, saying they could take effect on April 2, and floated a 25% “reciprocal” tariff on European cars and other goods.

A White House official, however, said Trump’s previous March 4 deadline for the 25% tariffs on Mexican and Canadian goods remained in effect “as of this moment,” pending his review of Mexican and Canadian actions to secure their borders and halt the flow of migrants and the opioid fentanyl into the U.S. Trump sowed confusion during his first cabinet meeting on Wednesday, when he was asked about the timing for the start of the duties for Canada and Mexico and replied that it would be April 2.

“I have to tell you that, you know, on April 2, I was going to do it on April 1,” Trump said. “But I’m a little bit superstitious, I made it April 2, the tariffs go on. Not all ofthem but a lot of them.”

Trump’s comments prompted jumps in the value of the Canadian dollar and Mexican peso versus the greenback.

Canada’s Finance Ministry and Mexico’s Economy Ministry both declined to comment on Trump’s remarks.

U.S. Commerce Secretary Howard Lutnick said the fentanyl-related actions were paused for 30 days but referred to “overall” tariffs on April 2. He did not specify whether the March 4 deadline was still in effect.

“So the big transaction is April 2, but the fentanyl-related things, we’re working hard on the border,”
Lutnick said during the cabinet meeting. “At the end of that 30 days, they have to prove to the president that they’ve satisfied him in that regard. If they have, he’ll give them a pause, or he won’t.”

EU Tariff Rate

Trump has targeted early April for imposing reciprocal tariffs that would match the import duty rates of other countries and offset their other restrictions. His trade advisers consider European countries’ value added taxes to be akin to a tariff.

Trump, asked whether he has decided on a tariff rate for goods from the European Union, replied: “We have made a decision, and we’ll be announcing it very soon, and it’ll be 25%, generally speaking, and that’ll be on cars, and all of the things.”

He said the EU is a “different case” from Canada and takes advantage of the U.S. in different ways.

“They don’t accept our cars. They don’t accept, essentially our farm products,” Trump said, adding that the EU was formed “in order to screw the United States.”

Roberta Metsola, president of the European Parliament, is in Washington and will meet U.S. lawmakers on Wednesday, a spokesman said. She is not slated to meet with any Trump administration officials.

New U.S. Trade Representative Confirmed

Also on Wednesday, the U.S. Senate voted 56-43 to confirm Jamieson Greer as Trump’s new U.S. Trade Representative, putting a veteran of the Republican president’s first-term trade wars fully on the job.

Greer, who served as chief of staff to former USTR Robert Lighthizer, won the support of five Democrats, including both senators from Michigan, the center of the U.S. auto industry.

Trade groups welcomed Greer’s confirmation, lauding his commitment to consulting with industry and standing up for U.S. businesses, farmers and workers. “We share Ambassador Greer’s desire for an active and pragmatic trade policy that creates

U.S. jobs and more resilient supply chains,” said Jake Colvin, president of the National Foreign Trade Council.

Greer told senators during his Senate confirmation hearing that he wanted to quickly renegotiate the U.S.-Mexico-Canada Agreement on trade to ensure China does not use it as a back door to the U.S. market to avoid other tariffs.

“Right out of the gate, I expect that we’ll be taking a second look at the USMCA,” Greer said.

Asked what changes he would like to see in the pact, Greer zeroed in on further tightening automotive content rules.

“I think we should look at the rule of origin for automobiles and aerospace and other things to look and see if we need to have any kind of restriction on content or value added from foreign countries of concern, or non-market economies,” he said, using language that U.S. trade officials often use to describe China.

(Reporting by David Lawder and Andrea Shalal; additional reporting by Bo Erickson and Ryan Jones in Washington, Brendan O’Boyle in Mexico City and Ismail Shakil in Ottawa; Editing by Dan Burns, David Gregorio and Paul Simao)

Mexico’s Sheinbaum Pushes for USMCA Deal as Tariff Deadline Nears

Tue, 25 Feb 2025 19:02:31 GMT

Mexican President Claudia Sheinbaum reaffirmed her commitment to securing a deal with the U.S. to prevent the imposition of 25% tariffs on Mexican exports, set to take effect on March 4. She emphasized Mexico’s dedication to addressing the U.S. fentanyl crisis and maintaining strong trade relations under the USMCA.

Sheinbaum also noted that Mexico is considering additional tariffs on imports from countries without free trade agreements, particularly China. Bloomberg reported this week that if Mexico imposes tariffs on Chinese imports the direct impact will be limited, as Mexico accounts for only 2.4% of China’s total exports.

Economy Minister Marcelo Ebrard remains in Washington for negotiations, as Sheinbaum expressed willingness to speak directly with President Trump if necessary.

Trump said Monday that his planned 25% tariffs on all Mexican and Canadian exports to the U.S. “are going ahead on time, on schedule,” meaning the duties would take effect on March 4 at the conclusion of a one-month suspension.

“This is an abuse that took place for many, many years,” Trump said in justification of the decision to impose tariffs on the United States’ neighbors and North American trade partners. “And I’m not even blaming the other countries that did this, I blame our leadership for allowing it to happen. I mean who can blame them if they made these great deals with the United States, took advantage of the United States on manufacturing, on just about everything,” he said at a joint press conference with French President Emmanuel Macron.

Are Tariff Threats Trump’s Way to Reach a New USMCA Deal?
As the Trump administration decides whether to impose tariffs or not, some argue this negotiation is a precursor to renegotiating USMCA, and this is actually President Trump’s way of renegotiating that agreement.

Is that the case? That’s what Farm Journal asked Gregg Doud who served as the Chief Agricultural Negotiator in the Office of the United States Trade Representative (USTR) during the Trump administration.

“I think you will intentionally never know the answer to that. That’s what I think,” said Doud. “You saw was it at CPAC last week where the Vice President, J.D. Vance, explained the art of President Trump and the way he negotiates. He never takes anything off the table.... it’s all negotiable. That’s the way he views the world. And he’s never going to let you know really where you’re at until the bottom line. He’s a master at it, I think.”

Parts of Mexico Face Growing Drought
One factor that could impact demand for imports is Mexico’s intensifying drought. Mexico’s northwest region is grappling with extreme drought conditions, with parts of Sinaloa, Sonora, Chihuahua, Durango, and Coahuila classified under the highest drought severity level, “exceptional,” according to the National Water Commission (Conagua).

The ongoing dry spell, exacerbated by the La Niña climate phenomenon, has led to widespread crop failures, dwindling reservoir levels, and looming water shortages.

Mexico’s current drought map.

(Conagua)

Water storage in Sinaloa’s dams has hit a 30-year low, with key reservoirs like Adolfo López Mateos and Huites at critically low levels. The drought has severely impacted agriculture, leaving nearly half of Sinaloa’s farmland unplanted.

In response, the government has launched a cloud seeding initiative, allocating 13 billion pesos ($636 million) to stimulate rainfall. Governor Rubén Rocha assured farmers of continued support for fertilizers, seeds, and price stabilization measures but urged cost reductions in agricultural production. With little to no rain expected before July, water rationing and supply cuts are anticipated in the coming months.

USDA's Rollins: 'Let's Go Barnstorm The World And Find New Partners' For Trade

Tue, 18 Feb 2025 18:48:49 GMT

On Brooke Rollins’ first full week on the job as Secretary of Agriculture, she addressed the 600 farmers, ranchers and industry leaders in Kansas City for the 2025 Top Producer Summit.

High on Rollins’ list of priorities was the topic of trade and President Donald Trump’s vision for U.S. agriculture moving forward.

While Rollins did not shy away from addressing the administration’s decision to implement trade tariffs, noting “farmer and rancher concerns are legitimate,” she focused on what she sees as her role ahead.

“My job is to ensure that as President Trump and our trade representatives are making their decisions that I am in the room and advocating on behalf of our people, on behalf of all of you,” she told Top Producer Summit attendees.

One of her key objectives, she says, is to find and expand market access for U.S. agricultural products domestically and abroad.

“Let’s go barnstorm the world, and let’s go find some more trade partners and access [to market opportunities],” she says.

Rollins says her goals for trade are a reflection of Trump’s vision and his determination to make agriculture part of the “golden age” he sees ahead for the U.S.

Trump is the consummate deal maker, Rollins notes, able to side-step bureaucracy and red tape in the process to work with world leaders.

“I don’t know that in the last 250 years, we’ve had anyone in office like President Trump,” she says. “He is a very unusual, remarkable and fearless man, and he wants to make a deal, and in the best way, and put America first.”

Agriculture Secretary Brooke Rollins spoke to a crowd of 600 farmers, ranchers and industry leaders at the 2025 Top Producer Summit.

(Jim Barcus)

Making Headway With Trade
Sen. Roger Marshall of Kansas, who moderated the conversation with Rollins, highlighted Trump’s work to build trade during his first term.

“He redid USMCA, and now that’s our largest ag partnership, with Mexico and Canada,” Marshall says. “He gave us South Korea and Japan, which has been so important to Kansas and our cattle industry, as well as trade 1.0 with China.”

Marshall then mentioned the headway he believes Trump and team have made with India.

“I see India replacing China as our major trade partner, as well that China is growing right now,” Marshall says. “I think there’s huge opportunities in India.”

U.S. ethanol, cotton and tree nuts are three of the top agricultural exports to India, a country that has in the past impeded agricultural trade with tariffs and non-tariff barriers alike. Trump called out the barriers to trade following recent conversations with India’s Prime Minster Modi.

A joint statement after the Trump-Modi meeting said Washington welcomed New Delhi’s recent steps to lower tariffs on select U.S. products and increase market access to U.S. farm products, while seeking to negotiate the initial segments of a trade deal by the fall of 2025.

Rollins says the progress underway with India was just one step forward to address what she described as a trade crisis for the U.S.

“Our exports are down $37 billion this year and likely to be down $42 billion in the months to come. This is a crisis, and this is something that I understand inherently,” Rollins says.

“We have a tremendous amount of work to do,” she adds. “But my promise to you is this, and my commitment will never waver, that every minute of every day for the next four years, I will do everything within my power with hopefully God’s hand on all of us and our work to ensure that we are not just entering the golden age for America, as my boss, President Trump, likes to say, but that we are entering the golden age for agriculture.”

Secretary Rollins joined Chip Flory on AgriTalk. Listen to their discussion about trade policy and tariffs; avian flu; and disaster and economic aid.

Your next read: Senate Overwhelmingly Confirms Brooke Rollins as 33rd Secretary of Agriculture

Trump Imposes Sweeping Steel and Aluminum Tariffs, Sparking Trade War Risks

Tue, 11 Feb 2025 15:57:02 GMT

President Donald Trump as expected raised tariffs on steel and aluminum imports to a flat 25% without exceptions , aiming to support struggling domestic industries but escalating trade tensions worldwide. The measures, effective March 12, eliminate country-specific exemptions and extend to downstream steel and aluminum products, affecting key suppliers such as Canada, Mexico, Brazil, and South Korea.

The move expands Trump’s 2018 Section 232 tariffs, justifying the action on national security grounds.

“It’s 25% without exceptions,” Trump emphasized, adding that reciprocal tariffs on countries taxing U.S. goods will be announced soon.

According to the White House fact sheet , the move is to restore fairness into the steel and aluminum markets, while also strengthening the manufacturing industry in the U.S. The White House fact sheet states:

Foreign nations have been flooding the United States market with cheap steel and aluminum, often subsidized by their governments.
A report from the first Trump Administration found that steel import levels and global excess were weakening our domestic economy and threatening to impair national security.
While the domestic steel industry briefly achieved 80% utilization in 2021, subsequent trade pressure following the COVID-19 pandemic has depressed domestic production. In 2022 and 2023, capacity utilization fell to 77.3% and 75.3%, respectively. High import volumes from sources exempt from Section 232 tariffs are a major factor in depressing domestic production volumes.
For aluminum, there was an increase in the capacity utilization rate between 2017 and 2019, from 40% to 61% during that period. But since 2019, the aluminum capacity utilization has once again seen a steady decline, falling from 61% to 55% between 2019 and 2023.
The United States does not want to be in a position where it would be unable to meet demand for national defense and critical infrastructure in a national emergency.

Criticism from Canada

Canada criticized the action as unjustified, citing its critical role in U.S. supply chains. The European Commission, South Korea, and other affected nations expressed concern, with retaliatory measures and negotiations expected in the coming days.

U.S. steel and aluminum producers saw stock gains, while foreign steelmaker shares fell.

Trump Considers Exemption for Australia on Steel, Aluminum Tariffs

President Trump agreed to consider exempting Australia from newly reinstated steel and aluminum tariffs, following a call with Australian Prime Minister Anthony Albanese. Trump reintroduced a 25% tariff on imports after previously allowing duty-free quotas. The decision could escalate trade tensions globally.

Citing Australia’s trade surplus with the U.S. and the strategic Indo-Pacific partnership, Trump acknowledged the exemption request, saying he would “give great consideration” due to the strong bilateral ties and Australia’s minimal share of U.S. steel (1%) and aluminum (2%) imports. Albanese described the call as constructive, expressing confidence in a favorable outcome. Australian officials highlight the importance of steel exports for U.S. defense supply chains, especially under the AUKUS pact.

South Korea Seeks Talks with President Trump

South Korea’s acting President Choi Sang-mok said the government would seek talks with the Trump administration on the tariffs Washington is imposing to reflect the interests of domestic companies. The CEOs of 20 major South Korean conglomerates plan to visit the U.S. in the near future, while the government intends to discuss response measures with Japan and the European Union, Choi said.

EU Expected to Respond Strongly

The European Union pledged a robust response to the U.S.’ recent imposition of 25% tariffs on steel and aluminum imports, a move that has reignited transatlantic trade tensions. European Commission President Ursula von der Leyen warned that “unjustified tariffs” will trigger “firm and proportionate countermeasures.”

The EU is exploring several options, including:

Targeted tariffs: Imposing reciprocal tariffs on U.S. goods, focusing on politically sensitive sectors.
WTO challenge: Filing a complaint with the World Trade Organization.
Safeguard measures: Protecting European industries from potential surges in imports redirected from the U.S. market.

German Chancellor Olaf Scholz and French Industry Minister Marc Ferracci have both emphasized the need for a unified EU response. The European Commission has convened an emergency meeting of trade ministers to discuss next steps, signaling the potential for a broader trade conflict if the U.S. does not reconsider its tariff policy.

Trudeau Slams U.S. Tariffs on Canadian Steel and Aluminum as “Unjustified”

Canadian Prime Minister Justin Trudeau criticized U.S. tariffs on steel and aluminum as “entirely unjustified,” according to a CBC video posted on X. Trudeau emphasized that Canada’s response “will be firm and clear” while the government engages with Donald Trump’s administration to underline the tariffs’ negative impact on both nations. When asked about the possibility of retaliatory tariffs, Trudeau expressed hope that escalation could be avoided.

Trump Confirms Speaking with China’s Xi Since Taking Office

President Donald Trump revealed in a Fox News interview that he had spoken with Chinese President Xi Jinping since his inauguration on Jan. 20 but did not disclose details of the conversation.

“We have a very good personal relationship,” Trump said, though he did not specify when the call took place or what was discussed.

Despite rising tensions between the U.S. and China over trade, cybersecurity, Taiwan, and other issues, Trump previously stated he was in no rush to contact Xi regarding the ongoing trade conflict. The Chinese Foreign Ministry did not confirm the latest conversation, instead referring to a scheduled call on Jan. 17 before Trump officially took office.

Meanwhile, China recently responded to U.S. trade tariffs with targeted duties on American imports and potential sanctions on several U.S. companies, including Google.

Trump’s plan to call Xi following his latest round of tariffs on China has been delayed, with no contact yet made.

Trump says he’s “in no hurry,” but the Wall Street Journal says insiders suggest that Beijing hasn’t proposed a concrete plan to curb China’s role in the U.S. fentanyl crisis — a key demand behind Trump’s decision to impose an additional 10% tariff on Chinese goods.

A U.S. administration official noted that the tariffs could be paused if “serious headway” is made on fentanyl during the next Trump-Xi conversation. Unlike the quick deals reached with Mexico and Canada that resulted in suspended tariffs, China has yet to offer a concession.

“The Chinese should just offer to crack down on fentanyl once and for all,” an American executive told the WSJ, highlighting Beijing’s proven efficiency in suppressing dissent and private enterprise. But President Xi appears in no rush. Instead, he’s pursuing a broader agreement that could shape long-term U.S./China relations.

Beijing’s initial proposal, according to the Wall Street Journal, involves reinstating elements of the 2020 trade deal, a renewed pledge not to devalue the yuan, and commitments for increased U.S. investments. For now, however, Xi seems willing to absorb the additional tariffs, relying on Chinese companies’ ability to reroute exports through third countries.

In response to the U.S. tariffs, China has imposed modest retaliatory measures, avoiding full escalation while keeping leverage on the table. Actions include new tariffs on U.S. energy imports and an investigation into Google for potential antitrust violations.

Of note:
1.36 billion shipments entered the U.S. in fiscal year 2024 using the de minimisprovision. The provision allowed bargain platforms Shein and Temu to skirt import duties on low-value packages from China.

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Tariffs and trade: CPMA president shares what’s at stake for fresh produce

Trump Agrees to Delay Tariffs on Goods From Mexico and Canada for 30 Days

Mon, 03 Feb 2025 16:14:46 GMT

The U.S. has agreed to delay tariffs on goods from Mexico and Canada for one month to allow for more time for negotiations. The agreement from both sides happened on Monday, just hours before the tariffs were set to take effect.

Sostuvimos una buena conversación con el presidente Trump con mucho respeto a nuestra relación y la soberanía; llegamos a una serie de acuerdos:

1.México reforzará la frontera norte con 10 mil elementos de la Guardia Nacional de forma inmediata, para evitar el tráfico de drogas…
— Claudia Sheinbaum Pardo (@Claudiashein) February 3, 2025

President Claudia Sheinbaum said U.S. tariffs against Mexico will be delayed for one month after a conversation with President Donald Trump on Monday. Trump then confirmed the news on Truth social.

Mexico’s president said she had reached several agreements with Trump during the phone call and that both countries will start working on trade and security.

Sheinbaum also said her government agreed to reinforce the border with the U.S. with 10,000 National Guard officers to prevent the trafficking of drugs, particularly fentanyl, from Mexico to the U.S.

Trump had announced plans to hold discussions with the leaders of Canada and Mexico on Monday following his recent declaration of imposing significant tariffs on imports from these countries and China.

“I don’t expect anything very dramatic,” Trump said before he held any of the calls. “We put tariffs on. They owe us a lot of money, and I’m sure they’re going to pay.”

Tariffs Also Delayed At Least One Month on Goods from Canada

Just hours after Mexico’s president said Trump agreed to pause tariffs for at least 30 days, Canadian Prime Minister Justin Trudeau made a similar announcement on X.

I just had a good call with President Trump. Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly…
— Justin Trudeau (@JustinTrudeau) February 3, 2025

In his tweet, Trudeau wrote, “I just had a good call with President Trump.”

Trudeau also committed to appointing a “Fentanyl Czar” and better patrol the border.

Executive Order Over the Weekend Hit Mexico and Canada With Tariffs

Before and after Trump singed the executive order over the weekend, Mexican President Claudia Sheinbaum vowed to counter with retaliatory measures. On Saturday, Sheinbaum announced Mexico would issue its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled.

Sheinbaum said last week she had told her economy minister “to implement Plan B” which she said “includes tariff and non-tariff measures” though it was not clear what those measures were exactly.Sheinbaum said: “We have Plan A, Plan B, Plan C, depending on what the government of the United States decides. It’s very important that Mexicans know that we will always defend the dignity of our people, respect for our sovereignty and a dialogue among equals [with the U.S.], not with subordinates.”

Sheinbaum noted that Mexico has been open to receiving its citizens sent back under Trump’s plan for mass deportation of unauthorized migrants and that it was prepared to take some from other countries, which represented a concession. Deputy Economy Minister for Trade Luis Rosendo Gutierrez is expected to travel to Washington on Monday, according to reports. But he can’t meet with U.S. trade or Commerce Department officials until they’re formally ratified, they said. Instead, he’ll talk to business leaders and associations. Sheinbaum has also pointed to Foreign Minister Juan Ramon de la Fuente as a key interlocutor to US Secretary of State Marco Rubio.

High-level teams from Mexico’s foreign ministry and the State Department are in frequent communication working on security and migration, Mexico is the No. 1 trade partner of the United States, and sends 80% of its exports north. Mexico supplies around half of America’s imported fruit and two-thirds of imported vegetables, in dollar terms — tomatoes, berries, bell peppers, cucumbers. And it’s the largest source of imported beer. Mexico also is the No. 1 provider of medical devices to American hospitals and doctor’s offices, from surgical gloves to scalpels. Mexico emerged last year as the top market for American agricultural exports, totaling $30 billion.

Trump announced general tariffs at his Mar-a-Lago, Florida estate. White House spokesperson Karoline Leavitt said the tariffs would be implemented immediately, but as noted, Canada said tariffs would be implemented on their goods on Tuesday. It typically takes weeks for tariffs to take practical effect.

Key points:

Sector-specific tariffs: New duties will target high-tech and industrial sectors, potentially covering more imports by dollar value than previous tariffs on China. Trump also suggested Friday he’d consider new tariffs on oil and gas, potentially by Feb. 18, though it wasn’t clear what he was referring to.
The duties come on top of existing tariffs on those products. The first Trump administration imposed tariffs on more than $300 billion worth of Chinese goods to respond to an array of unfair trade practices, including intellectual property theft. The Biden administration kept all of them in place and increased rates on $18 billion in goods, including electric vehicles, solar panels, medical equipment, lithium-ion batteries, steel, and aluminum.
A second wave of tariffs could follow a comprehensive review of the trade relationship among the three countries (Canada, Mexico and China) that Trump has ordered completed by April 1.
Exemptions and negotiations: There are ongoing discussions about potential carve-outs for critical industries (like oil and automobiles) amid intense lobbying by U.S. business and labor groups. Some hope for exemptions to mitigate domestic economic risks. Trump told reporters in the Oval Office on Friday that there was nothing Canada, Mexico and China could do to avoid the tariffs before Saturday. “Not right now,” he said, telling reporters that his tariff threat wasn’t a negotiating tool. “It’s a pure economic [decision],” he said. But he did say he was considering a lower tariff on Canadian crude oil — 10% instead of 25% (and that it was he announced on Saturday). At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all U.S. imports from Canada, according to U.S. Census Bureau data. The tariff on China would be for what Trump said was failing to stop the manufacturing of fentanyl precursor chemicals.

Reasons for the tariffs”

Trump on Friday said, “We’ll be announcing the tariffs on Canada and Mexico for a number of reasons. Number one is the people that have poured into our country so horribly and so much,” he said about migrants that have entered the United States via its southern and northern borders. “Number two are the drugs, fentanyl and everything else, that have come into the country and number three are the massive subsidies that we’re giving to Canada and to Mexico in the form of [trade] deficits,” Trump said. “I’ll be putting the tariff of 25% on Canada and separately 25% on Mexico and we will really have to do that because we have very big deficits with those countries. Those tariffs may or may not rise with time,” he said.

During a Friday press conference in the Oval Office, Trump criticized the previous administration’s handling of trade agreements. During his previous term, Trump initiated trade disputes, particularly with China, which significantly impacted U.S. agricultural exports. He stated that China had committed to buying $50 billion a year in farm products, but claimed that former President Joe Biden didn’t enforce this commitment. Trump said, “We’re going to enforce it,” referring to this $50 billion annual purchase agreement with China. His recent statements suggest a continuation of this aggressive stance on trade, framing it as necessary to protect American farmers and correct perceived imbalances left unaddressed by the Biden administration.

Trump’s team was initially considering a grace period between the announcement of the tariffs on Saturday and when they would be imposed, but White House press secretary Karoline Leavitt played down that possibility on Friday. Leavitt said that a Reuters report stating that the tariffs wouldn’t be implemented until March 1 was “false.”

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Canada, Mexico Hit Back with Retaliatory Tariffs on U.S. Imports

Sun, 02 Feb 2025 13:56:54 GMT

In response to President Donald Trump’s decision to impose 25% tariffs on Canadian and Mexican goods , Canada announced its own 25% tariffs on $155 billion worth of U.S. imports. Mexican President Claudia Sheinbaum also announced its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled.

Canada Strikes Back
Prime Minister Justin Trudeau stated that the tariffs will roll out in two phases, starting Feb. 4 on $30 bil. targeting American products such as alcohol, produce, household goods, and industrial materials, the same day the American tariffs are set to begin.

The tariffs on the other $125 billion worth of goods will come in 21 days, to allow impacted Canadian companies to adjust their supply chains. Trudeau emphasized that Canada’s response would be “strong but appropriate,” while also considering non-tariff measures like restrictions on critical minerals.

The move has drawn mixed reactions within Canada, with provincial leaders urging strategic countermeasures while ensuring minimal harm to the domestic economy. Meanwhile, the White House justifies the tariffs as a measure against drug trafficking and illegal border crossings, further straining trade relations between the two countries.

American items that Canadians tariffs will be applied to include:

Beer, wine, and bourbon
Fruits and fruit juices including orange juice, as well as vegetables
Perfume, clothing, and shoes
Major consumer products such as household appliances and furniture
Sports equipment
Other materials such as lumber and plastics

The government of Canada says a more detailed list of impacted products will be released soon.

More Tariffs Coming
Foreign Affairs Minister Mélanie Joly said on Jan. 31 that Canada’s retaliatory tariffs would be coming in rounds. “There would be a first round of measures, second round of measures, and a third round of measures,” Joly said at a press conference in Washington. “And we’ll keep ourselves also some leverage.”

When asked if Canada would be shutting off oil exports to the U.S., Trudeau said he will be ensuring Canada’s response will be “equitable” and won’t be damaging to one part of the country more than the others. Energy-rich Alberta has strongly opposed any export tariffs on oil, or for Canada to stop oil exports altogether. Trump said on Jan. 31 that the U.S. tariffs will be lower on Canada’s oil and gas exports, at 10%, while other goods will have a tariff of 25%.

Canada’s trade surplus in merchandise with the U.S. was around $100 billion (US$59 billion) last year, according to a report by TD Bank. If Canadian oil exports to the U.S. are removed from the figure, the “scales tip to America’s favor,” the report says, meaning the United States would have a $60 billion (US$41 billion) trade surplus.

Canada and U.S. Conduct Two-way Trade Worth $1.3T Every Year

According to the Canadian Chamber of Commerce, 2.3 million Canadian jobs are supported by exports to the U.S., and 1.4 million American jobs are supported by exports to Canada. A Bank of Canada analysis says that under a mutual 25% tariffs scenario, Canada’s GDP would take a 2.4% hit.

Mexico Announces Plans for Retaliation
Mexican President Claudia Sheinbaum announced its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled. Sheinbaum said she had told her economy minister “to implement Plan B” which she said “includes tariff and non-tariff measures” though it was not clear what those measures were exactly.

China Reacts
China’s Ministry of Commerce denounced Trump’s tariffs, saying they undermine “the normal economic and trade cooperation” between the U.S. and China.

The ministry said it would challenge the U.S. action at the World Trade Organization (WTO) and take countermeasures “to firmly safeguard its own rights and interests.” The WTO dispute settlement mechanism has been dysfunctional for years amid U.S. opposition to the appointment of new judges.

Your Next Read:
Trump Officially Signs Three Executive Orders Imposing 25% Tariffs on Canada and Mexico, 10% Tariffs on China

Trump Officially Signs Three Executive Orders Imposing 25% Tariffs on Canada and Mexico, 10% Tariffs on China

Sat, 01 Feb 2025 23:01:55 GMT

Big tariffs, big risks, big impacts: When populism and commercial agriculture collide.

President Donald Trump signed three executive orders for tariffs Saturday, the first time a president has used powers granted under the International Emergency Economic Powers Act of 1977. The orders also include retaliation clauses that would ramp up tariffs if the countries respond in kind. Trump cut the levy on imports of Canadian energy to 10%.

Trump officially announced plans to impose new tariffs on imports including computer chips, pharmaceuticals (without specifying which, at what level or when it would take effect), steel, aluminum, copper, oil, and gas by mid-February, expanding his administration’s trade war strategy. He said he would put new taxes on imported oil and gas on Feb. 18 and aimed to do the same for steel and aluminum this month or next month. This move is separate from scheduled tariffs — 25% on Canadian and Mexican goods and 10% on Chinese products set for Saturday, Feb. 1 — and aims to pressure Mexico, Canada, and China to address issues such as border security, drug trafficking, and migration.

Here’s the detailed Fact Sheet from the White House .

Of note: Canadian officials were told by U.S. officials on Saturday that the tariffs would be implemented on their goods on Tuesday, according to people familiar with the situation. Senior figures on Capitol Hill were briefed on the decision.

Trump also hinted at additional tariffs on EU products, citing poor treatment of the United States, though details remain vague. The president said he “absolutely” would impose tariffs on their shipments to the United States. “We are treated so badly: They don’t take our cars, they don’t take our farm products; essentially, they don’t take almost anything. And we have a tremendous deficit with the European Union. So, we’ll be doing something very substantial with the European Union,” he said.

Related News: Canada, Mexico Hit Back with Retaliatory Tariffs on U.S. Imports

Big impact. Such levies targeting imports from America’s top three trading partners — which together accounted for more than 41% of the U.S.’ goods trade in the January-November period of 2024 — potentially affect trillions of dollars in merchandise, like cars and farm products.

Trump said there was nothing the three countries could do now to stop the tariffs.

Trump announced general tariffs at his Mar-a-Lago, Florida estate. White House spokesperson Karoline Leavitt said the tariffs would be implemented immediately, but as noted, Canada said tariffs would be implemented on their goods on Tuesday. It typically takes weeks for tariffs to take practical effect.

Key points:

Sector-specific tariffs: New duties will target high-tech and industrial sectors, potentially covering more imports by dollar value than previous tariffs on China. Trump also suggested Friday he’d consider new tariffs on oil and gas, potentially by Feb. 18, though it wasn’t clear what he was referring to.
The duties come on top of existing tariffs on those products. The first Trump administration imposed tariffs on more than $300 billion worth of Chinese goods to respond to an array of unfair trade practices, including intellectual property theft. The Biden administration kept all of them in place and increased rates on $18 billion in goods, including electric vehicles, solar panels, medical equipment, lithium-ion batteries, steel, and aluminum.
A second wave of tariffs could follow a comprehensive review of the trade relationship among the three countries (Canada, Mexico and China) that Trump has ordered completed by April 1.
Exemptions and negotiations: There are ongoing discussions about potential carve-outs for critical industries (like oil and automobiles) amid intense lobbying by U.S. business and labor groups. Some hope for exemptions to mitigate domestic economic risks. Trump told reporters in the Oval Office on Friday that there was nothing Canada, Mexico and China could do to avoid the tariffs before Saturday. “Not right now,” he said, telling reporters that his tariff threat wasn’t a negotiating tool. “It’s a pure economic [decision],” he said. But he did say he was considering a lower tariff on Canadian crude oil — 10% instead of 25% (and that it was he announced on Saturday). At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all U.S. imports from Canada, according to U.S. Census Bureau data. The tariff on China would be for what Trump said was failing to stop the manufacturing of fentanyl precursor chemicals.

Why a lower tariff on China? Trump’s threats on tariffs are clearly not all bark and no bite, said Wendy Cutler, vice president of the Asia Society Policy Institute in Washington and a former acting deputy U.S. trade representative in the Obama administration. “He’s clearly in an action-oriented mode and wants to use these tariffs to pressure the three countries to address serious U.S. concerns,” Cutler said. “This is the beginning of the story, this is the first salvo in what’s going to be a long four years,” she said. On why the tariff on Chinese goods will be 10% and not 25%, Cutler said this shows that Trump “may be more interested in seeking a trade deal” with Beijing.

Trump said the Biden administration had not enforced trade deals beneficial to U.S. farmers. During a Friday press conference in the Oval Office, Trump criticized the previous administration’s handling of trade agreements. During his previous term, Trump initiated trade disputes, particularly with China, which significantly impacted U.S. agricultural exports. He stated that China had committed to buying $50 billion a year in farm products, but claimed that former President Joe Biden didn’t enforce this commitment. Trump said, “We’re going to enforce it,” referring to this $50 billion annual purchase agreement with China. His recent statements suggest a continuation of this aggressive stance on trade, framing it as necessary to protect American farmers and correct perceived imbalances left unaddressed by the Biden administration.

· Trump’s team was initially considering a grace period between the announcement of the tariffs on Saturday and when they would be imposed, but White House press secretary Karoline Leavitt played down that possibility on Friday. Leavitt said that a Reuters report stating that the tariffs wouldn’t be implemented until March 1 was “false.”

· Reasons for the tariffs. Trump on Friday said, “We’ll be announcing the tariffs on Canada and Mexico for a number of reasons. Number one is the people that have poured into our country so horribly and so much,” he said about migrants that have entered the United States via its southern and northern borders. “Number two are the drugs, fentanyl and everything else, that have come into the country and number three are the massive subsidies that we’re giving to Canada and to Mexico in the form of [trade] deficits,” Trump said. “I’ll be putting the tariff of 25% on Canada and separately 25% on Mexico and we will really have to do that because we have very big deficits with those countries. Those tariffs may or may not rise with time,” he said.

· International reactions: Leaders from Canada, Mexico, and China are preparing responses. The scale of their responses will depend on whether Trump’s actions match his rhetoric, according to officials in Canada and Mexico.

Canada comments. “You will find when we do respond, at least initially, that we will focus on tariffing American goods that actually are sold in significant quantities in Canada, and especially those for which there are readily available alternatives for Canadians,” Natural Resources Minister Jonathan Wilkinson said in an interview cited by Bloomberg on Friday ( link ), hours after Trump reiterated his plan to bring in tariffs on Canada, Mexico and China.
Of note: Canadian officials were told by U.S. officials on Saturday that the tariffs would be implemented on their goods on Tuesday, according to people familiar with the situation.

Canadian Prime Minister Justin Trudeau warned of economic fallout, and Canada even weighed an export tax on oil to undercut Trump’s ability to exclude gasoline price hikes from his tariff fight. Mexican and Canadian officials have expressed frustration that they don’t know what actions would satisfy Trump’s demands, despite weeks of meetings between senior officials. A Canadian contact said Trump “keeps on moving the goal post… If Trump was trying to build anti-American sentiment in a country like Canada (who get mad about little except for hockey), he is executing well.” Trudeau’s government won’t unveil its retaliation list until it sees what the Trump administration moves forward with. After Trump tied tariffs to what he called an “invasion” of migrants and fentanyl, Canadian officials in December unveiled a $900 million border plan, to add helicopters, drones and other surveillance capacity. “Canada’s border is strong and we’re making it stronger,” said Public Safety Minister David McGuinty, speaking to reporters. “When our largest ally raises concerns, we take it seriously.” McGuinty was in Washington Friday to meet with U.S. border czar Tom Homan. Bloomberg reports that Canadian officials come to the discussions armed with documents, charts and even time-lapse videos of certain border crossings. Only 1.5% of migrants apprehended by U.S. Customs and Border Protection in the 2024 fiscal year and 0.2% of fentanyl seized at U.S. borders came from Canada.

Ontario Progressive Conservative Leader Doug Ford spoke in anticipation of Trump’s tariffs on Canadian imports, which are set to be implemented on Saturday, calling them “reckless… I wish I had better news to share but Donald Trump couldn’t have had been more clear. He’s moving forward with these reckless tariffs. He’s chosen to tear up decades of good will that has made life better for workers on both sides of the border, for businesses on both sides of the border, for families on both sides of the border,” Ford said at a campaign event in Brampton.”

Mexican President Claudia Sheinbaum vowed to counter with retaliatory measures. Sheinbaum said: “We have Plan A, Plan B, Plan C, depending on what the government of the United States decides. It’s very important that Mexicans know that we will always defend the dignity of our people, respect for our sovereignty and a dialogue among equals [with the U.S.], not with subordinates.” Sheinbaum noted that Mexico has been open to receiving its citizens sent back under Trump’s plan for mass deportation of unauthorized migrants and that it was prepared to take some from other countries, which represented a concession. Deputy Economy Minister for Trade Luis Rosendo Gutierrez is expected to travel to Washington on Monday, according to reports. But he can’t meet with U.S. trade or Commerce Department officials until they’re formally ratified, they said. Instead, he’ll talk to business leaders and associations. Sheinbaum has also pointed to Foreign Minister Juan Ramon de la Fuente as a key interlocutor to US Secretary of State Marco Rubio. High-level teams from Mexico’s foreign ministry and the State Department are in frequent communication working on security and migration, Mexico is the No. 1 trade partner of the United States, and sends 80% of its exports north. Mexico supplies around half of America’s imported fruit and two-thirds of imported vegetables, in dollar terms — tomatoes, berries, bell peppers, cucumbers. And it’s the largest source of imported beer. Mexico also is the No. 1 provider of medical devices to American hospitals and doctor’s offices, from surgical gloves to scalpels. Mexico emerged last year as the top market for American agricultural exports, totaling $30 billion.

· USMCA impact. While the U.S., Canada and Mexico have a standing free-trade agreement, it isn’t clear that the expected tariff action would immediately violate that pact. The U.S.-Mexico-Canada Agreement (USMCA), like most trade pacts, includes a provision that allows for the imposition of tariffs on national-security grounds.

One of Trump’s tariff goals is to push Canada and Mexico to accelerate a renegotiation of USMCA, now slated for July 2026. President Trump and his supporters believe that imports of cars and steel from Mexico (and China’s involvement in such activity) are weakening U.S. manufacturers. And they say the USMCA, the trade deal Trump signed in 2020 to replace the North American Free Trade Agreement, needs to be updated — or perhaps, scrapped.

Of note: According to economists at S&P Global, of the imports coming into the United States from Canada and Mexico, more than 18% of their value was created in the United States, before being sent to those countries. That’s far more than the proportion for other countries, and a sign of how closely the economies are integrated.

One out of three cars sold in Mexico last year came from China. That means Chinese exports are now meeting Mexican demand for cars, rather than exports from the United States, a blow to the U.S. auto industry.

· Economic impact concerns: “I think there could be some temporary, short-term disruption and people will understand that,” Trump said. Trump said the tariffs “will reinvigorate industry. “The way you bring it back to the country is by putting up a wall. And the wall is a tariff wall,” he said. “The tariffs are going to make us very rich and very strong.” He dismissed concerns that placing steep taxes on many foreign goods would lead to renewed inflation in the United States, where prices are still rising faster than the Federal Reserve’s target. “Tariffs don’t cause inflation. They cause success,” the president said.

Although Trump dismissed worries about inflation and supply chain disruptions, critics warn that broad tariff applications could disrupt trade and lead to higher prices for consumers, especially in border regions heavily reliant on imports from North America. Tariff-related price increases would hit consumers’ wallets at a time when beef prices are near record highs and costs for eggs have climbed after bird flu eliminated millions of egg-laying hens. “Any increase in expenses in the form of a tariff subsequently serves as a ‘food tax’ on consumers for imported products and is not a workable solution,” National Grocers Association spokesman David Cutler said.

Tariffs are paid by American importers and borne by consumers, though offset potentially by price reductions abroad. The burden will fall disproportionally on low-income households who spend more of their income on physical goods relative to higher income households who spend more of their income on services and experiences, which aren’t subject to tariffs.

A new analysis from the Budget Lab of Yale estimated that the proposed tariffs could raise annual costs on households by roughly $1,300. Researchers at the Peterson Institute for International Economics in Washington estimate that a 25 percent tariff on all exports from Mexico and Canada would lower U.S. gross domestic product by about $200 billion for the duration of the second Trump administration. A model gauging the economic impact of Trump’s tariff plan from EY Chief Economist Greg Daco suggests it would reduce U.S. growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” at home. “We have stressed that steep tariff increases against U.S. trading partners could create a stagflationary shock — a negative economic hit combined with an inflationary impulse — while also triggering financial market volatility,” Daco wrote on Saturday.

Facts and figures: 17% of U.S. goods exports go to Canada, 16% go to Mexico and 7% go to China and totaled $763 billion in the first 11 months of 2024.

Of note: For many items, there is roughly a three-month wait until the tariffs impact consumer prices as retailers sell their existing inventory that are not subject tariffs. Getting a firm impact assessment of tariffs is difficult because some exporters will absorb some of the additional costs, and currency changes by some countries will temper the impacts. There will also mean changes to trade flow patterns as buyers seek alternatives sources and sellers look for other importers.

Mexican Economy Minister Marcelo Ebrard said a 25% duty on Mexican goods would have a multibillion-dollar impact on U.S. consumers, affecting millions of households. “Mexico is the main exporter of finished products like automobiles, computers, TV screens and refrigerators,” he said, adding that tariffs would also raise prices of fresh fruit and vegetables, meat and beer. “This impact will be greater in border states and cities that are big consumers of Mexican goods, like California, Texas, Florida and Arizona,” Ebrard said.

A Wall Street Journal opinion item ( link ) was headlined: The Dumbest Trade War in History; Trump will impose 25% tariffs on Canada and Mexico for no good reason.

House Ag Committee Chairman GT Thompson (R-Pa.): Trump’s tariff policy is a crucial tool. Following the imposition of tariffs on Mexico, Canada, and China by the United States, House Ag Chairman GT Thompson issued the following statement: “President Trump’s tariff policy has been an effective tool in leveling the global playing field and ensuring fair trade for American producers. Look no further than Colombia’s about face on accepting repatriated criminal migrants at the mere threat of tariffs. After four years of the Biden/Harris administration’s failure to expand foreign markets, which led to an inflated agricultural trade deficit of $45.5 billion, America’s producers deserve an administration that will fight for them. I look forward to working alongside of President Trump to support our hardworking producers and to make agriculture great again.”

House Ag Committee Ranking Member Angie Craig (D-Minn.) released the following statement ( link ): “No one wins in a trade war. The last time President Trump started a trade war, costs went up for America’s family farmers and consumers. The same will happen today. The cost of imported goods like oil, lumber, avocados, tomatoes, bell peppers, lettuce, broccoli, cucumbers, onions and mushrooms and other fresh food are likely to go up for Americans. At a time when farmers are struggling with high input costs and the American people continue to struggle with the cost of groceries, these tariffs will make it more expensive for farmers to grow food and for consumers to buy it. Additionally, when American farmers face the inevitable retaliatory tariffs from our trading partners, their profits take a hit. This action is especially questionable since President Trump’s previous administration negotiated our last trade agreement – USMCA — with Canada and Mexico.”

Imported goods.

(Bloomberg)

Tariffs coverage. Depending on carve-outs, this round of Trump tariffs could cover more trade in dollar value than his first-term duties on China. Trump’s four tranches of tariffs on Chinese goods in 2018-19 covered imports valued at around $360 billion at the time. New tariffs on Canada and Mexico plus additional tariffs on China would — if all items are subject to the action — cover imports valued at more than $1.3 trillion in 2023. Canada and Mexico combined supplied about 28% of U.S. imports in the first 11 months of 2024, according to Census Bureau data. China accounted for an additional 13.5%.

Price hikes: From Tonka trucks to tequila. While cars and lumber are obvious price hike targets, some unexpected items could see increases, too, according to the Wall Street Journal ( link ):

Cherry tomatoes: Canada and Mexico supply much of the U.S. market.
Tonka trucks: Made exclusively in China, these toys may see a price jump from $29.99 to nearly $40.
Maple syrup: With most commercial production coming from Canada, costs could rise. Canada and the U.S. are the only two countries that produce this at commercial scale, according to Canada’s agriculture department. More than 60% of Canada’s production is exported to the U.S.
Tequila & avocados: Mexico is the top supplier, meaning Super Bowl snacks and drinks could cost more.
Smartphones: Previously spared, they may now be hit with new tariffs.
Sledgehammers: Already taxed at 25%, additional tariffs could push prices even higher.

Securing the U.S. border and dealing with fentanyl are the two major goals of the Trump tariffs. According to Robert Marbut, former homelessness czar for the first Trump administration, fentanyl has killed more Americans in the past five years than all wars combined in the past 100 years. Marbut criticized Canada’s liberal drug policies and Mexico’s unstable regions, where cartels control the drug trade. He said that if the U.S. government is going to tackle fentanyl, it needs to recriminalize drugs domestically, stop China from sending precursors, get the biker gangs in Canada under control, and force Mexico to rein in the cartels. “Fentanyl is a hundred times more powerful than morphine,” he said. “Fentanyl dusts will kill children, fentanyl dusts will kill adults. So just three grains of salt equivalent will kill anybody.”

Tariffs as a revenue raiser. Peter Navarro, a Trump trade adviser, told CNBC on Friday that the tariff effort can replace the revenue of tax cuts. “Tariffs can easily pay for that,” Navarro said. “President Trump wants to move from the world of income taxes and countless IRS agents to the world where tariffs, like in the age of McKinley, will pay for a lot of government that we need to pay for and lower our taxes.” Perspective: The non-partisan Congressional Budget Office has put the cost of extending the 2017 tax cuts — Trump’s top legislative priority — at $4.6 trillion over 10 years. A 25% tariff on the more than $900 billion in annual imports from Canada and Mexico would raise roughly $225 billion annually or $2.3 trillion over 10 years if the tariffs had no impacts on trade, which many economists see as unlikely.

Of note: Navarro thinks corn exports haven’t been entirely benign. Navarro said that NAFTA had kick-started America’s illegal immigration problem, because when the United States began exporting corn to Mexico after the trade pact took effect, that put Mexican agricultural workers out of jobs, sending some of them into the United States. “That’s where that began, our illegal immigration problem,” he said.

Tariffs impact on the U.S. ag sector. American Farm Bureau Federation President Zippy Duvall wrote ( link ) to President Trump Friday urging him to consider U.S. farmers before proceeding with tariff action. “American farmers and ranchers rely heavily on export markets for their business success, especially during these times of economic distress across rural America,” Duvall wrote. A targeted approach to tariffs, with specific exemptions for fuel and fertilizer imports, Duvall added, could “minimize negative repercussions” for farmers. Mexico and Canada account for around a third of all U.S. agriculture exports, buying $30 billion and $29 billion, respectively. China received around $26 billion of ag products last year, Duvall said.

U.S. farmers face rising costs amid proposed Canadian import tariff. The proposed 25% tariff on Canadian imports is expected to have significant repercussions for U.S. farmers, particularly in their access to potash and fertilizers. Key Impacts:

Increased fertilizer costs: U.S. farmers rely on Canada for 85-86% of their potash. The tariff could raise fertilizer prices by $50 to $75 per ton, cutting into profit margins and potentially reducing crop yields.
Short-term supply challenges: With spring planting nearing, farmers may struggle to meet urgent fertilizer needs, as domestic production accounts for less than 10% of U.S. demand. Many farmers have already purchased and applied fertilizer for the 2025 crop season, potentially mitigating immediate impacts, but farmers are unclear as to whether their undelivered fertilizer from Canada will be impacted.
Long-term market shifts: Importers may seek alternative suppliers, and Canadian producers could absorb some costs, but a more significant price increase is expected for the 2026 crop season.
Broader economic consequences: Higher fertilizer costs may lead to rising food prices, strain U.S./Canada agricultural ties, and provoke potential retaliatory trade measures from Canada.

Survey quantifies Canadian farmers’ concern about impact of tariffs, potential trade war. New data from Real Agriculture’s RealAgristudies ( link ) confirms and quantifies the level of concern in Canada’s agriculture sector if the U.S. implements 25% tariffs on Canada on Feb. 1. Farmers who primarily produce livestock are slightly more likely to expect an impact on their farm business than mixed or primarily crop-focused farmers. Interestingly, there wasn’t much difference in how farmers see the potential impact when you compare age, farm size and geography.

Results of a survey of 660 Canadian farmers between Jan. 23 and Jan. 29 showed: 59% of respondents expect the proposed Trump tariffs will negatively impact their business. Only 7% feel there will be no effect. Another 7% don’t know if there will be an impact, while 27% see a possible impact of the Trump tariffs on their farm business.

When it comes to the likelihood of a trade war that significantly decreases Canadian agricultural exports, 29% of respondents feel that scenario is very likely, while 46% say it’s likely; 11% feel a trade war that hurts ag exports is unlikely.

Livestock producers tend to see a trade war as more likely (88%) than mixed (72%) or primarily crop producers (75%).

In terms of how Canada should respond to the tariffs, 34% of respondents said “all of the above” to including export tariffs on key items to the U.S., dollar for dollar retaliation and cutting off certain U.S. imports into Canada; 23% of farmers see an export tariff on key items like potash and energy as the best response as the best singular option.

· Tariff impact support for some industries. Canadian government officials have said that they would consider bailing out businesses and supporting workers who are most affected. Some industries would be swiftly disrupted: Agriculture, automobiles and energy suppliers, pillars of all three economies, would be upended by blanket tariffs.

Tariff aid for U.S. farmers. During her Senate confirmation hearing on Jan. 23, USDA Secretary nominee Brooke Rollins addressed concerns regarding potential tariffs and their impact on U.S. farmers. She acknowledged the possible adverse effects of such tariffs on the agricultural sector and emphasized her preparedness to implement support measures to mitigate these impacts. Rollins stated that she had consulted with former USDA Secretary Sonny Perdue, who oversaw $23 billion in trade aid to farmers during the previous Trump administration, and expressed readiness to execute a similar approach if necessary. She affirmed her commitment to working with the White House to ensure that any negative consequences of tariff implementations on farmers and ranchers are effectively addressed. While acknowledging the potential challenges posed by the proposed tariffs, Rollins conveyed confidence in Trump’s understanding of the agricultural community’s concerns. She described Trump as “the consummate dealmaker” who recognizes the significant support he has received from rural America and the agricultural sector.

U.S. farmers and various trade groups are very apprehensive about not only the potential negative impacts of tariffs on the U.S. ag sector, but what they do to garner new trade agreements, especially as they see China, Brazil, Russia and Ukraine announcing new trade accords or in the process of inking new ones.

Upshot: This latest tariff announcement underscores the escalating tensions in international trade policies and the potential for significant economic consequences if the disputes deepen. The tariff moves will test (1) the limits of Trump’s honeymoon period in his second term in the White House; (2) the U.S. economy and its tentative victory over inflation; (3) American consumers’ appetite to swallow fresh price increases; and (4) the patience of allies. The move against allies Canada and Mexico is a signal that no country is safe from his push to reshape global trade. Big experiment, big impacts, big risks, both economically and politically.

Trump Moves Forward With Plans to Impose 25% Tariffs on Canada and Mexico Starting Saturday

Thu, 30 Jan 2025 22:59:42 GMT

President Donald Trump announced that his administration will impose 25% tariffs on imports from Canada and Mexico starting Feb. 1, citing concerns over trade deficits, illegal immigration, and the fentanyl crisis.

Speaking from the Oval Office, Trump justified the tariffs as a response to what he described as excessive migration, drug trafficking, and unfair trade practices. While he suggested the tariff rate could rise further, he indicated that a decision on whether oil imports would be exempted would come soon.

“Mexico and Canada have never been good to us on trade. They’ve treated us very unfairly on trade,” Trump said, pointing to the huge trade deficits between those countries and the United States. Trump also complained about fentanyl entering the country, especially from Mexico.

Trump also reiterated plans to impose tariffs on China over its alleged role in fentanyl trafficking and suggested additional sectoral tariffs on industries such as pharmaceuticals, semiconductor chips, and steel. The policy shift signals a potentially disruptive turn in North American trade relations, threatening key industries like automotive and energy.

Market Reacts
Market reactions were immediate, with oil prices rising above $73 a barrel, the U.S. dollar strengthening, and the Canadian dollar and Mexican peso dropping. The move has triggered warnings of economic fallout, with both Canada and Mexico vowing to respond with retaliatory measures.

Five Key Questions to Ask

There are five key questions regarding tariff situation:

Will they be announced Sat., Feb. 1?
Will there be a last-minute agreement with Canada and/or Mexico?
What authority will be used to implement any tariffs?
Will there be any exemptions? Ongoing negotiations suggest a possible shift toward targeted measures, particularly affecting steel and aluminum, while oil may receive exemptions.
Will there be an implementation grace period to enable more negotiations?

Tariffs as a Tool to Pressure Canada and Mexico
The proposed tariffs are intended to pressure the two countries into negotiating on migration, drug smuggling, and reforms to the USMCA. The strategy reflects Trump’s preference for using tariffs as a tool to secure compliance with U.S. demands, as seen in a recent, albeit reversed, threat against Colombia.

While both Canada and Mexico have made overtures to address U.S. concerns, Trump’s administration remains unsatisfied. Canadian officials have prepared a list of retaliatory measures and expressed frustration over unclear demands and limited communication. Mexico, meanwhile, has stepped up efforts to curb migration and drug trafficking but faces similar obstacles in negotiating directly with Trump’s yet-to-be-confirmed economic team.

If enacted, the tariffs could disrupt key industries, particularly the ag sector and automotive manufacturing, where supply chains depend on cross-border collaboration. Critics warn of potential economic fallout, including higher consumer prices and a possible recession in Canada.

Despite these risks, Trump’s advisers, including Commerce Secretary nominee Howard Lutnick, advocate for a “tariffs-first” approach to bring trade partners to the table.

If tariffs going into effect on Feb. 1 and the tariff threats materialize, it potentially triggers a new trade war on the continent.

Too Soon?
Some feel Feb. 1 will be too early for any serious tariffs action. Reasons: Trump wants his top trade officials (Commerce Secretary, U.S. Trade Representative, Treasury Secretary, etc.) at their desks. That may take beyond Feb. 1, depending on Senate confirmations.

Also, Trump’s 23 trade executive orders assigned a review of prior trade agreements, trade deficits, practices, etc., with an April 1 deadline. One task involves the White House Office of Management and Budget assessing how foreign government subsidies impact U.S. procurement, with that report due by April 30.

Trump’s Pick for Commerce Secretary Back Tariffs, Slams Canada on Dairy
Howard Lutnick, President Trump’s nominee for Commerce Secretary, strongly defended tariffs and criticized Canada over dairy trade during his Senate confirmation hearing.

Lutnick accused Canada of treating U.S. dairy farmers “horribly” and vowed to secure better trade conditions under the USMCA, which President Trump wants a renegotiation on an accelerated timeline.

Of note: Canadian Pacific Kansas City says it expects shipments in North America to grow this year despite the looming threat of tariffs from the Trump administration.

Lutnick dismissed concerns that tariffs drive inflation, citing China and India’s policies, and expressed support for broad-based tariffs over a selective approach.

Lutnick also linked Trump’s proposed 25% tariffs on Canada and Mexico to border security and fentanyl concerns.

Lutnick said he prefers an “across-the-board” approach to imposing tariffs on foreign goods to put pressure on other countries to lower their own barriers to U.S. exports.

“Our farmers, our ranchers and our fishermen are treated with disrespect” by countries around the world, Lutnick said. “We need the disrespect to end.”

To accomplish that, Lutnick said he favors using across-the-board tariffs on all imports from a particular country, rather than a much more targeted approach.

“I think when you pick one product in Mexico, they’ll pick one product,” Lutnick said. “You know, we pick avocados, they pick white corn, we pick tomatoes, they pick yellow corn. All you’re doing is picking on farmers, which is just not going to happen.”

USMEF Looks At Red Meat Trade Opportunities With Mexico, Canada and the United Kingdom

Tue, 07 Jan 2025 21:39:25 GMT

With a new presidential administration set to take over leadership this month, what new opportunities might be available for red meat exports? Erin Borror, U.S. Meat Export Federation Vice President of Economic Analysis, says there are two areas of interest.

First, the U.S. Mexico Canada Agreement (USMCA) will be reviewed in 2026 and Borror says we need to maintain tariff-free trade with the two key trading partners with little barriers. Secondly, she sees potential with the United Kingdom as there were free trade agreement attempts with the previous Trump administration.

“The UK is the only major importer of which the U.S. has basically no market share, and it’s a one-way street with trade,” Borror explains. “We actually lost access through Brexit. We lost our duty-free access because the high-quality beef quota stayed with Europe.”

Borror sees nothing but opportunities for U.S. red meat exports to the UK.

“We have basically no access into the UK for U.S. beef, and that’s a $2 billion market, of which we’re essentially out of,” she says.

She adds there is tremendous potential on the pork side as well, noting the UK imports 630,000 tons of pork a year, about $2.8 billion, but U.S. pork is hardly there.

“We just need reciprocal access,” she says. “We need no tariffs, no quotas. The UK benefits from practically unfettered access into the U.S., and we need the same into the UK.”

Borror remains hopeful for the coming year.

“The UK could be one of those markets where there should see further opportunities for U.S. agriculture, and certainly for U.S. red meat,” she says.

Your next read: Mexican Border is Expected to Open for Feeder Cattle Week of Jan. 20, Sources Say

Canada Gears Up for Potential Trade Tensions with Trump

Tue, 07 Jan 2025 17:41:24 GMT

As expected, Prime Minister Justin Trudeau announced his resignation after more than nine years in office, citing declining approval ratings and internal party discord.

Trudeau, currently the longest-serving leader among G7 nations, plans to step down as head of the Liberal Party within months but will remain prime minister until a successor is chosen. Parliament is suspended until March 24 as the leadership transition unfolds.

“Canadians deserve a real choice in the next election, and it has become obvious to me, with the internal battles, that I cannot be the one to carry the Liberal standard,” Trudeau said.

The incoming Liberal leader will become Canada’s 24th prime minister but faces an uphill battle, with the Conservative Party currently favored to win the next election.

Meanwhile, Mark Carney, the former governor of the Bank of Canada and Bank of England, said he’s considering entering the race to replace Justin Trudeau as Canada’s prime minister. Canada’s currency strengthened after Trudeau said he plans to resign.

Bottom line:

Trudeau’s resignation reflects a culmination of long-standing issues, including declining popularity, internal party dissent, and external political pressures. Conservative leader Pierre Poilievre amplified demands for Trudeau’s resignation and early elections.

Gearing Up for Trade Tensions

As President-elect Donald Trump’s inauguration nears, Canada is preparing for potential trade challenges following Trump’s threat of a 25% tariff on Canadian imports. The Canadian government is considering a proactive approach, including the possible early release of a retaliatory tariff list.

A report from The Globe and Mail reveals that Canada might unveil a list of American goods subject to retaliatory tariffs ahead of time. This strategy was deliberated during a Canada/U.S. cabinet committee meeting on Jan. 6, 2025, though no final decision has been made.

Outgoing Prime Minister Justin Trudeau and his cabinet have been holding strategic meetings, emphasizing the importance of the issue. Canadian officials, including Trudeau, have engaged with Trump’s team to mitigate tensions. Ontario Premier Doug Ford proposed restricting energy supplies to certain U.S. states as a retaliatory option.

Says a Canadian contact: “This retaliatory list idea is very similar to past Canadian strategies and will likely strategically target certain states to influence reaction.”

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Could Trump Actually Be Good for U.S. Ag Trade?

Tue, 19 Nov 2024 20:52:49 GMT

President-elect Donald Trump has released a slew of key cabinet and advisory picks at a historic pace the past two weeks, but the agriculture industry is waiting on two key selections — Secretary of Agriculture and the U.S. Trade Representative.

The Financial Times previously reported Robert Lighthizer could make an encore performance as the U.S. Trade Representative under Trump , but nothing official has been announced.

“Trump and Bob Lighthizer are two peas in a pod when it comes to using tariffs to get what they want in amongst our trading allies,” says Jim Wiesemeyer, Pro Farmer Washington correspondent.

If it’s a repeat of the last time, Lighthizer held that seat, there will be an increased focus on trade and using tariffs, which comes as no surprise since that was a major point on the campaign trail

“President-elect Trump was so strong on doing tariffs before that, it’s very likely that he’ll follow through now,” Mary Kay Thatcher, who’s the senior lead for federal government relations at Syngenta, told “AgDay’s” Michelle Rook. “I mean, he’s talked about at a minimum 20% tariffs on everybody. He’s talked about 60% on China, who will likely fall to two or three, but still a very important market. And he’s talked about putting them on Mexico. If Mexico doesn’t stop as many people coming across the border.”

Tariffs were the talk of the campaign trail, not just on commodities, but even ag equipment that’s imported on.

Ag groups want a focus back on trade, but they are also concerned it could come at a cost.

“Mexico, Canada, China are always our No. 1, No. 2 and No. 3 three ag markets,” Thatcher says. “And so, a lot of concern in agricultural circles about the fact that most likely that’s where the retaliation starts first.”

Reality of a Growing Ag Trade Deficit

As tariff talk heats up, there are still tariffs in place today, and a growing ag trade deficit that’s glaring for U.S. agriculture. The ag trade deficit is expected to balloon to $42 billion in 2025, under the current administration. And Indiana farmer Kip Tom, who served as the ambassador to the United Nations in the first Trump administration, argues the focus back on trade could bode well for ag.

“When Trump was president, we did nearly 50 trade deals around the world,” Tom told “AgDay’s” Clinton Griffiths in an interview. “He did the Phase One deal with China. And granted, we didn’t get to Phase Two or Phase Three, but the reality is he got to put together and he got started following the trade war that we had with him for a little bit. So, I think trade is going to be No. 1.”

Tom says Trump’s next four years will be looking at new trade deals, but today, groups like U.S. Meat Export Federation (USMEF) also want any trade negotiations to do no harm, especially considering some meat exports have actually grown this year, in spite of the widening U.S. ag trade deficit.

“I think if you look at 2024 pork exports, we’re pulling our weight. We’re going to have record volume and record value this year, approaching $8.5 billion or so on the pork side,” says Dan Halstrom, CEO of USMEF.

Mexico Becomes U.S. Top Buyer

Halstrom says record demand from pork is broad based, but the No. 1 buyer is Mexico.

“Mexico is being driven by everything,” Halstrom says. “I mean, food service, retail, convenience stores. The buying power of the Mexican trade has been record breaking but also a little bit amazing.”

Earlier this year, Mexico bumped out China as the top trading partner for the U.S. But in the final days of Trump’s presidential campaign, he threated to impose 25% tariffs on all Mexican imports if Mexico didn’t tighten the border. And Mexico’s economy minister said it’s considering retaliatory tariffs of its own.

“I think as long as we don’t have any disruption, then yes, I think the strong export pace is very well positioned to continue,” Halstrom says. “Of course, you have new administrations coming in with a lot of talk about the U.S.-Mexico-Canada Agreement (USMCA). But as long as we stay within the confines of the USMCA agreement and follow that, I think we’re well positioned to continue this momentum in Mexico.”

Dairy and the Importance of USCMA

Another protein seeing positive demand from Mexico through the USMCA is dairy.

“When the administration first negotiated USMCA, which was do no harm to what’s working well, and for us, dairy continues to be overall a really positive relationship. So, working to help preserve that,” says Shawna Morris, executive vice president of trade policy and global affairs at National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council.

The relationship with Mexico within USMCA has been a positive for dairy, but it’s the Canadian side of the agreement that needs work, according to Morris.

“I mean, they’re flat out not doing what they promised to do. And I just don’t see any way around calling them on the carpet for that,” Morris says. “Yes, they eked out a win in the last dispute settlement case the U.S. brought against them, but if one judge had changed their mind, though, we would have been on the winning side. It’s just a three-person panel. This isn’t gospel here; we’re talking about what Canada’s doing is shady. It needs fixed.”

She says between the way Canada administers the dairy tariff rate quota quantities to U.S. competitors, to their excessive exports of dairy protein, dairy is a piece of USMCA that needs to be addressed.

“The last administration tried to deal with that in USMCA,” Morris says. “We had some disciplines to try to tackle it in the agreement. And Canada has found some workarounds that both of those issues are going to need to be on the table. I think just in terms of UCMCA, it’s clean-up and follow through.”

The Biggest Wild Card: China

Even with southeast Asia, Latin America and Mexico carrying the weight for dairy exports, China is still the biggest wild card. We asked Morris if China does retaliate against Trump’s threatened 60% tariffs, if it would have the same impact as it did during the last trade war.

“China, even though it has pulled back on its global dairy imports, it’s still our third-largest export market,” Morris says. “So, it’s a pretty sizable market and difficult to place out into other markets the volume of that production, but I think what we also saw the first time around, in addition to the pain and disruption caused by the retaliatory tariffs that were imposed, was at the end of the process progress having been made.

Phase One Trade Deal with China

Progress in the form of the U.S. China Phase One agreement, which as Tom noted, was negotiated under Trump’s first term. Morris describes that deal as useful for dairy.

“We had a number of different non-tariff barriers, issues that were a drag on our ability to be able to reliably export to that market. And the phase one agreement included progress and dealt with a whole handful of those,” Morris says. “So, I’d say, yes, there’s upheaval. We’ve also seen from the first time around that that can yield significant progress in certain respects, and we’re hopeful that that’s more of what we’ll see this time around.”

China has also scaled back on their buys of U.S. pork, with exports down 11% so far this year, but Halstrom points out even with increased tariffs now entering the picture again, tariffs the past four years never went away.

“The thing to remember on these tariffs is, we’ve had a tariff now for quite a few years on China, on both beef and pork, and it’s not the ideal situation, but it doesn’t it doesn’t eliminate trade,” Halstrom says. “We ended up doing $2 billion in sales on beef with a tariff in 2022, I believe was the year. A lot of that came as a result of the phase one agreement in 2020, but people sometimes forget that there was a tariff involved, and we still had a pretty good outcome.”

Two weeks after the election, and Trump’s playbook seems to be unfolding quickly with all his cabinet picks. But some argue those tariffs might just be threats at first.

“Here’s what the Republicans tell me,” Wiesemeyer says. “Trump isn’t going to invoke these across-the-board tariffs right away. He’s going to use that as leverage to countries looking at their trade relationship with the U.S., and his key word is ‘reciprocity.’ If you don’t treat us like we treat you, then I’m going to invoke tariffs.”

Those close to Trump seem to be in alignment: the U.S. needs fair trade.

“When we’re spending $500 billion in China, and they’re only spending $350 billion with us, we need to level that out a little bit. And maybe it means more agriculture trade going into China to balance that trade out,” Tom says. “I’m very optimistic on trade with Trump. I have no doubts that we’ll get things put together. He knows farmers don’t like to get their money from the government; they like to get it from the market. And so, I’m really excited about that when we talk about trade. But yet, I know everybody’s pretty edgy about it at this point in time.”

Your Next Read: Do Tariffs Work? The Answer Isn’t As Straightforward As You May Think

Trump Threatens 200% Tariff If Deere Moves Manufacturing to Mexico

Tue, 24 Sep 2024 01:35:28 GMT

Former President Donald Trump on Monday made significant statements regarding John Deere and its plans to move some production to Mexico. Trump threatened to impose a 200% tariff on John Deere products if the company proceeds with its plan to relocate some of its manufacturing operations to Mexico. He made this announcement during a policy roundtable in Smithton, Penn., organized by the Protecting America Initiative.

Trump’s threat comes in response to John Deere’s recent announcement about moving some of its production to Mexico, which has already resulted in job cuts at certain facilities in Iowa. Trump expressed concern about the impact on American workers, stating, “It’s hurting our country. It’s hurting our workers.”

When contacted for a response, John Deere referred to a section on its website titled “Deere Commitment to U.S. Manufacturing,” which highlights its investments in American facilities and workforce. The company stated that to keep its U.S. factories focused on high-value activities, it sometimes needs to move less complex operations, such as cab assembly, to other locations.

Following Trump’s remarks, shares of Deere fell approximately 1.6% in after-hours trading shortly after the market closed on Monday.

This threat to John Deere appears to be an extension of Trump’s economic policy, which has consistently emphasized the use of tariffs. He has previously made similar threats to automakers producing vehicles in Mexico. Trump’s focus on protecting American manufacturing jobs is a key element of his campaign strategy, particularly in battleground states like Pennsylvania where he held this event.

Trump’s comments about John Deere seem to have been spontaneous, inspired by John Deere tractors displayed at the event venue. This marks the first time Trump has specifically targeted John Deere with such a threat, expanding his tariff warnings beyond the automotive industry to include agricultural equipment manufacturers.

A Look at the USMCA

Several aspects of the USMCA, negotiated by the Trump administration, help facilitate U.S. manufacturers like John Deere moving some production to Mexico:

Duty-free access: The USMCA maintains duty-free trade between the U.S. and Mexico for most goods, allowing companies to manufacture in Mexico and export back to the U.S. without tariffs.
Rules of origin: The USMCA has rules of origin requirements that goods must meet to qualify for duty-free treatment. Manufacturing in Mexico can help companies meet these requirements for North American content.
Increased regional content requirements: The USMCA raises the regional value content (RVC) requirement for automobiles from 62.5% under NAFTA to 75%. This incentivizes more production and sourcing within North America, including Mexico.
Labor Value Content (LVC) provision: The agreement requires 40-45% of auto content to be made by workers earning at least $16 per hour. This can make Mexico an attractive option for U.S. companies looking to meet this requirement while still benefiting from lower overall labor costs. While the USMCA includes stricter labor standards for Mexico, wages are still significantly lower than in the U.S. for most workers. Mexican workers often make 3-4 times less than U.S. counterparts. • Streamlined supply chains: The USMCA facilitates the movement of goods between the U.S., Mexico, and Canada by reducing trade barriers and tariffs. This makes it easier for U.S. companies to integrate Mexican operations into their supply chains.

Potential for Relocation

The USMCA rules may encourage some manufacturers to relocate certain production processes within North America to meet content requirements, which could involve significant upfront costs but potentially lead to long-term savings.

Your Next Read: EXCLUSIVE: John Deere Speaks Publicly For the First Time About Layoffs, New Challenges in the Ag Economy

USMCA Trade Panel Rejects U.S. Complaint About Access to Canada Dairy Market

Tue, 28 Nov 2023 22:40:16 GMT

A trade dispute settlement panel set up under a major North American free trade agreement has rejected a U.S. complaint that Canada is improperly limiting access to its dairy market, an official report showed on Friday.

The United States had accused Canada of not meeting obligations under the 2020 United States-Mexico-Canada Agreement to open its market to foreign producers.

The three-person independent panel ruled that Canada had not acted unreasonably. Their report was released on Friday.

U.S. Trade Representative Katherine Tai said in a statement that she was “very disappointed” by the ruling.

“The United States continues to have serious concerns about how Canada is implementing the dairy market access commitments it made in the Agreement ... we will not hesitate to use all available tools to enforce our trade agreements,” she said.

Trading partners say that although Canada has over the years agreed in a number of deals to allow somedairy market access to foreign firms through a system of tariff-rate quotas, it was in fact improperly allocating most of them to domestic firms.

“Canada is very pleased with the dispute settlement panel’s findings, with all outcomes clearly in favour of Canada,” Trade Minister Mary Ng said in a statement.

In January 2022, an earlier USMCA panel said Ottawa had violated the accord by not opening up the domestic market enough. Canada then amended its policies.

The USMCA agreement kept in place Canada’s decades-old supply management system, which restricts domestic production of dairy, eggs and poultry to stabilize incomes of dairy farmers and protect them from import competition with high tariffs.

Canada’s roughly 10,000 dairy farmers form one of the most influential political lobbies. Most farm in Quebec and Ontario, the provinces with the most parliamentary seats.

Buckle Up: Dispute Panel Called to Action by US in Mexico’s GMO Corn Ban

Thu, 17 Aug 2023 18:48:33 GMT

USDA’s Economic Research Service (ERS) explained this week in its monthly Feed Outlook report that corn exports are reduced 25 million bushels this month to 1.625 billion.

“The weak pace of exports continues into the last quarter of the marketing year, with June exports totaling 150.4 million bushels, down approximately 66 million bushels from June 2022. Corn exports through the first 10 months of the marketing year sit at 1.466 billion bushels,” said ERS in its report.

(Farm Journal)

ERS’s analysis points toward weaker corn exports to close out the marketing year. An announcement from the Office of the U.S. Trade Representative (USTR) on Thursday reveals the U.S.’s GMO corn dispute with Mexico could have something to do with the export decline.

Trade dispute panel called to action in GMO corn ban

USTR shared Thursday it will establish a U.S.-Mexico-Canada Agreement (USMCA) dispute settlement panel as a solution to Mexico’s move to ban GMO corn imports at the beginning of 2023. According to USTR, Mexico’s actions violate the trade agreement.

“Mexico’s approach to biotechnology is not based on science and runs counter to decades’ worth of evidence demonstrating its safety and the rigorous, science-based regulatory review system that ensures it poses no harm to human health and the environment,” says Tom Vilsack, USDA secretary. “Innovations in ag biotechnology play a key role in advancing solutions to our shared global challenges.”

How the USMCA Dispute Process Works

Initially, the U.S. tried to forego a dispute with Mexico through negotiations. Because one-on-one conversations have not remedied the issue, the U.S. began the formal process of a dispute, which includes:

1. Consultations

According to Congress, technical consultations are the initial step in invoking a dispute. USTR took this step in March, which required the U.S. and Mexico to meet within 30 days.

2. Establishing a Dispute Panel

This is the step USTR announced Thursday. At this point, the issue becomes a full-blown trade dispute, and a process will take place to put three to five people on a panel from both Mexico and the U.S.

3. The Panel Process

The elected panel will examine evidence and hear oral testimony from both Mexico and the U.S.

4. Resolving the Dispute

Once the panel delivers a verdict, the party that is found to have violated its obligations under the USMCA will have 45-days to settle the dispute. If a settlement isn’t reached in that window, the “winning” party can impose tariffs on the ag products, such as GMO corn.

What the ag industry has to say about Mexico’s GMO corn ban

Leaders at the National Corn Growers Association (NCGA) said they are in support of USTR’s dispute panel move.

“Mexico’s decree, which runs counter to scientific findings and is in direct violation of USMCA, is negatively impacting American corn growers,” said Tom Haag, NCGA president. “U.S. officials have exhausted every avenue trying to resolve this conflict and are left with no other choice but to turn to a third-party panel in hopes of quickly rectifying this issue.”

USTR Comments on USMCA Meetings

Fri, 07 Jul 2023 19:00:00 GMT

During a bilateral meeting on Thursday, U.S. Trade Representative (USTR) Katherine Tai discussed with Mexico’s Secretary of Economy Tatiana Clouthier various issues concerning energy and biotech corn.

According to the Office of the USTR, Tai highlighted concerns about the recent upsurge of steel and aluminum imports from Mexico into the U.S. Further, the regulatory uncertainties confronted by American electronic payment service providers operating in Mexico, and Mexico’s telecommunications spectrum fee method were also issues that were discussed.

Tai said that trade dispute settlement consultations over GMO corn that the U.S. requested in June began with Mexico last week.

Mexico’s Health Ministry on Monday published a draft proposal to modify the Official Mexican Standard (NOM) that governs products made from masa, or corn dough. The proposal is part of an overall federal government effort to stop Mexicans from eating white GMO corn imports, most of which comes from the U.S.

“The use of genetically modified corn as a raw material must be avoided in the making of the products covered by this Mexican Official Standard,” states the document.

Interested parties have 30 days to comment on the proposal, after which the government could publish a modified NOM in its official gazette that bans the use of GM corn in tortillas. The modified NOM would take effect 60 days after publication. The National Chamber of Industrialized Corn (Canami) said that the proposed measure “creates restrictions on international trade and members of the International Trade Organization must be notified.”

Canami also said that the costs of laboratory tests to determine whether corn is GMO or not aren’t being considered. The chamber said that those costs could cause their members to record net losses.

The Health Ministry’s publication came just over a week after the federal government imposed a 50% tariff on white corn imports to limit human consumption of GMO corn. The tariff, which ends access to white corn imports, is scheduled to remain in force until Dec. 31, 2023, after which Mexico intends to ban the importation of GMO corn for human consumption. A ban on GMO corn for animal feed is slated to come in at an unspecified later date, depending on supply.

What’s Next with Mexico and the U.S. in GMO Corn

Despite the contentious nature of these topics, Tai remains hopeful of solutions. She affirmed to reporters that the U.S. has noted some progress in negotiations about energy with Mexico, expressing optimism that the dispute would eventually be resolved.

In a second readout, USTR said Tai discussed the disputes over Mexico’s energy and biotech corn policies with Canadian Trade Minister Mary Ng. Tai also underscored the need for Canada to fully meet its USMCA commitments, including dairy and home shopping, and urged Canada to refrain from imposing a digital services tax.

Of note: The latest Commerce Department report shows the U.S. trade deficit with Mexico rose to a record $14.1 billion in May.

USMCA Up for Debate in Mexico This Week

Thu, 06 Jul 2023 17:16:27 GMT

This week’s talks in Cancun, Mexico between U.S. Trade Representative (USTR) Katherine Tai, Canadian Trade Minister Mary Ng, and Mexican Economy Minister Raquel Buenrostro will allow them to assess the state of the agreement and discuss a series of disputes. Issues include:

• U.S. and Canadian concerns about Mexican energy and biotech policies

• U.S. concerns on Canadian dairy barriers

• Canadian objections to U.S. softwood lumber duties

Another issue is auto rules of origin regulations. Canada and Mexico previously contested the Trump administration’s approach to implementing these rules, arguing the U.S. interpretation was more burdensome than originally negotiated. Even though they won the case in December 2022, the Biden administration has yet to modify the approach, inviting possible retaliation from Canada and Mexico.

Stakeholders plead for answers

U.S. business groups want the Biden administration to formally request a dispute settlement panel to challenge Mexican energy policies that they believe are a violation of the USMCA that went into force three years ago.

The American Petroleum Institute and more than a dozen other business groups raised the energy concern in an 11-page letter to Tai ahead of her attendance today and tomorrow at a meeting of the USMCA Free Trade Commission in Cancún, Mexico.

“We commend the Biden administration’s decision last year to request consultations under the USMCA regarding Mexico’s energy policies,” the groups said in the letter. “However, we are concerned by the Mexican Government’s failure to fix the issues raised by the United States. Mexico continues to hinder the operations of private companies in its energy sector, contrary to its own laws.”

Tai requested consultations with Mexico on the energy issues nearly one year ago on July 20, 2022, and was joined by Canada in the dispute. However, neither country has taken the next step of asking for a panel of trade experts to hear their complaint and decide whether Mexico has violated the three-year-old pact.

Regarding U.S. disputes against Mexico’s biotech corn policies and Canada’s dairy market access barriers, the U.S. has formally requested a dispute settlement panel to issue a decision.

USMCA dispute bottom line

USTR officials said that while the issues on biotechnology, dairy and energy may come up during the discussions, the dispute settlement process was the “primary” venue for such discussions.

“While there are areas of disagreement, of course, some of which may come up in these bilateral meetings, they do not outweigh the productive nature of our trade relationship,” an official said.

The official said those items are not “walled off” from being discussed, the primary format on those topics is the consultations that are ongoing.

Expiration date stamped on the USMCA

The USMCA has an expiration timeline of 16 years, with the opportunity for extension depending on the consensus of Canada, Mexico, and the U.S. The review process starts in year six (2026), where each country can express desire to extend or can raise issues to be addressed. In the latter case, annual reviews will continue until the issues are resolved or the agreement ends in year 16.

US Has Seen Consistent Growth in Ag Exports to Mexico Under NAFTA, USMCA

Fri, 16 Jun 2023 19:00:27 GMT

U.S. has seen consistent growth in ag exports to Mexico under NAFTA and USMCA. In 2022, the U.S. exported 38.9 MMT of ag products to Mexico with a value of $28.5 billion, showing significant growth since NAFTA started in 1994 with exports of 13.4 MMT and $4.67 billion.

Over the 29 years of free trade, U.S. ag exports to Mexico increased both in terms of volume and value, although there were some years where growth was not positive.

Related story: US Moves to Full Blown Trade Dispute with Mexico Over GMO Decree

Trade value growth stagnated during the mid and late 2010s, despite volume growth. This is thought to be due to the decreased per unit export value of several major commodities. Nevertheless, value grew significantly over time, as shown in Chart 1: U.S. Ag Exports to Mexico, 1989-2023.

While the USMCA coincided with a sudden rise in value in 2020, the pandemic and high inflation were likely factors in this growth.

(Farm Journal)

Texas has contributed to the overall growth of U.S. ag exports to Mexico, accounting for 19% ($5.55 billion) of total U.S. ag exports in 2022. Chart 2: U.S. Ag Exports to Mexico, 1989-2023 demonstrates how Texas’ export values have increased in 13 of the past 20 years, while the U.S. as a whole increased in 15 of the past 20 years.

(Farm Journal)

Canada Warns on 'Product of USA' Regulation

Thu, 27 Apr 2023 15:41:48 GMT

In early March, the USDA proposed the label be restricted to meat, poultry and eggs that are born, raised, slaughtered and processed in the United States. Currently, foreign meat that is processed in U.S. plants can be labeled “Product of USA.” Arun Alexander, Canada’s deputy ambassador, isn’t convinced this is a good practice.

Canada’s “Product of USA” Outlook

Alexander in Washington, said Tuesday, “We are concerned about the real-world consequences” of changing the rules on the voluntary “Product of USA” label. He went on to say the integrated livestock market “is a real reflection of the value and importance of local and regional food systems.”

With animals from both nations available to processors, plants can operate at full capacity, he said. “Small and medium-sized processors are the ones that can least afford to segregate products.”

Related story: USDA Seeks to Limit Use of ‘Product of USA’ Label By Packers

Of the voluntary “Product of USA” label, Alexander said, “I think we have to look at the specific products to make sure we don’t disrupt those effective supply chains. And so we are willing to work together with the United States to implement measures that achieve the objective but also not disrupting those supply chains.”

The Upshot

According to Alexander, Canada “will participate in USDA’s consultation process” on the regulation. The public comment period on the proposal runs through June 11.

Four Ag Topics Discussed in Mexico City During USMCA Meetings

Fri, 13 Jan 2023 18:40:59 GMT

Mexico City ran the headlines this week, as Mexican President Andrés Manuel López Obrador hosted President Biden and Canadian Prime Minister Justin Trudeau for the 10th North American Leaders’ Summit.

In their Tuesday meeting, the three leaders shared a conversation including these top takeaways for the ag industry:

1. Semiconductor manufacturing

The three agreed to organize a semiconductor forum with industry representatives and government officials in early 2023 to coordinate semiconductor supply chain needs and investments. Semiconductor companies building new manufacturing facilities in the U.S. would like to put parts of their supply chain in Mexico.

Read more: What to Watch in 2023

2. Methane and food waste reduction

The countries also committed to reducing methane emissions from the solid waste and wastewater sector by at least 15% by 2030 compared with 2020 levels, and to develop a proposal to cut food loss and waste in half by 2030.

3. Energy

Biden, López and Trudeau agreed to create a plan for standards and installation of electric vehicle chargers along their international borders.

The energy topic comes as Mexican officials are in consultations with the U.S. to avoid a U.S.-Mexico-Canada Agreement (USMCA) dispute panel over Mexican energy policy. Canada has also joined in the complaint.

The U.S. Trade Representative’s office says the policy puts billions of dollars in U.S. investments at risk.

Canada also has concerns over the implementation of an electric-vehicle provision in the Inflation Reduction Act signed by Biden last year.

While Trudeau did not elaborate on his concerns, Biden said Trudeau has “always been there” when he reached out. With that, Biden intends to travel to Canada to discuss the matter in March.

Read more: Title 42 Talks Continue with Biden at U.S./Mexico Border

4. U.S./Mexico Border Wall

Biden, in the meeting, was met with thanks from López Obrador for not building “even one meter of wall.”

“You are the first president of the United States in a very long time who has not built even one meter of wall. We thank you for that, sir,” said López Obrador.

The comments come as the Biden administration announced a program to allow 30,000 migrants from Cuba, Haiti, Nicaragua and Venezuela, collectively, to enter the U.S. legally each month.

Still, López Obrador suggested Biden “insist” Congress regularize undocumented Mexican migrants who work in industries where American employers are struggling mightily to find enough workers.

By the end of the discussion, López Obrador labeled Biden as “a man with conviction.” López Obrador then moved to challenge Biden to improve life across the region, telling him he “holds the key” to change.

“This is the moment for us to determine to do away with this abandonment, this disdain and this forgetfulness for Latin America and the Caribbean,” López Obrador said.

While López Obrador and Biden reserved a moment for a border wall discussion, no commentary was shared regarding GMO corn trade .

Read more: Mexico’s GMO Corn Debate Tabled Until 2025, According to Mexico