No tariffs have been imposed yet in the war of words between the administration of President Donald Trump and Mexico. But the dispute between the two countries deserves producers’ attention because of its implications for agriculture if financial or policy changes unfold, argues Jim McCormick of Allendale.
“Trade agreements that have occurred over the last 30 to 40 years have really helped out American agriculture,” McCormick tells “AgDay” host Clinton Griffiths on the Agribusiness Update segment for Monday, Feb. 13, 2017. “We sell over $1 billion worth of beef, $1 billion worth of pork, $1 billion worth of chicken to Mexico alone. They’re also our biggest corn importer. If Trump would push hard to Mexico, will they push back? And how might they push back?”
One option: Mexico could begin sourcing corn from places such as South America.
“I had a customer who said, ‘There’s no way they’ll buy South American corn. They’ll have to buy it from the U.S.’ Well, the point I like to make is we import corn from Brazil twice a year out into the East Coast,” McCormick says. “It seems crazy, but we do. Economically, think about it: You can bring corn in from the East Coast of the U.S. from a foreign country compared to bringing it in from Ohio, Indiana.”
More broadly, the Trump administration’s comments about trade also have targeted the other two nations—China and Canada—that round out the top three trade partners for the U.S. Trump has called China a currency manipulator, and he has pointed to NAFTA, which includes Canada, as one of many deals that needs to be revisited.
“It’s something that producers just need to keep an eye on,” McCormick says. “If you start hearing [about] tariffs and repercussions, the fact of the matter is that’s going to be bearish American agriculture.”