Farm Progress

What is at stake if U.S.-Mexico feud escalates?

Tariff proposal follows Trump's moves to renegotiate NAFTA.

Bob Burgdorfer, Senior Editor

January 27, 2017

2 Min Read
doranjclark/ThinkstockPhotos

The escalating rhetoric between President Trump and Mexico has raised concerns among commodity groups that trade between the two countries could be affected. For agriculture, the risk could be substantial as the U.S. sells billions of dollars worth of crops, dairy and meat across the border every year.

It is too early to say if the dispute will result in a trade war or loss in business, but concerns were already heightened with Trump’s moves to renegotiate the North American Free Trade Agreement. Ag groups early this week sent a letter to President Trump outlining the importance of NAFTA on food and agriculture trade.

Related: Trump intends to rework NAFTA

“Although some important gaps in U.S. export access still remain, increased market access under NAFTA has been a windfall for U.S. farmers, ranchers and food processors. U.S. food and agriculture exports to both countries have more than quadrupled, growing from $8.9 billion in 1993 to $38.6 billion in 2015,” the letter said.

In the latest verbal salvo, the Trump Administration this week threatened a 20% tax on imported Mexican goods to pay for the wall. That could drive prices higher for U.S. consumers for such things as fresh fruit and vegetables and even beer. However, by late week, White House Press Secretary Sean Spicer appeared to back away from that plan saying a tax “was one possibility for raising revenue for the border wall.”

“Mexico is obviously a huge customer. We are a huge buyer of their produce as well. It’s impossible to even begin to estimate impacts because there’s nothing to base guesses from other than Twitter,” said Bryce Knorr, Farm Futures senior grain analyst. “I imagine nothing will happen on food. U.S. consumers don’t want to pay more for tomatoes, and U.S. farmers wouldn’t want to see their corn not being sold.”

Related: Trump's push against trade deals disappoints some of his supporters

U.S.-Mexico Agriculture 2015 Trade Data from the U.S. Trade Representative’ s office:

  • U.S. goods and services trade with Mexico was valued at $583.6 billion. Exports were $267.2 billion and imports $316.4 billion for a U.S. deficit of $49.2 billion.

  • Mexico was the United States’ No. 3 trading partner for goods at $531 billion with exports at $236 billion and imports at $295 billion.

  • The U.S. exported $18 billion in agriculture products to Mexico to be the No. 3 agriculture export market. The products: corn $2.3 billion, soybeans $1.4 billion, dairy $1.3 billion, pork $1.3 billion and beef $1.1 billion.

  • Regarding imports, Mexico is the No. 3 supplier of goods to the U.S. and totaled $295 billion in 2015.

  • The top imported items: vehicles $74 billion, electrical machinery $63 billion, machinery $49 billion, mineral fuels $14 billion and optical and medical equipment $1.4 billion.

  • Top imported agriculture items in 2015: fresh vegetables $4.8 billion, fresh fruit $4.3 billion, wine and beer $2.7 billion, snack foods $1.7 billion and processed fruit and vegetable $1.4 billion.

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