Ag is in Trouble Without NAFTA

February 2, 2018 10:13 AM

As trade negotiators continue to renegotiate the North American Free Trade Agreement (NAFTA), industry stakeholders are hopeful President Donald Trump is committed to making the deal better for agriculture, rather than completely walking away from it.

“When you talk about NAFTA, all I can think about is ‘The Art of the Deal’ and master negotiator,” says Iowa farmer Tim Recker, referencing the president’s book. “He wants a plan that’s good for all of the U.S.”

Industry stakeholders are working to ensure ag is not forgotten in negotiations. In January, a broad group of food system stakeholders ranging from the American Farm Bureau Federation and National Corn Growers Association to Walmart joined together to create a new coalition, called Americans for Farmers and Families, to advocate for U.S. involvement in free trade agreements, specifically, NAFTA.

Pulling out of the deal could be devastating to U.S. agriculture. Since the pact was signed in 1994, exports to Mexico have nearly quadrupled. Not only are there impressive statistics on how much NAFTA has grown the economy, but farmers have felt it directly and would take the brunt of the economic impacts of leaving the trade deal.   

“Just as farmers and ranchers have been among the biggest beneficiaries of NAFTA, they’d also be the ones to feel the most pain if the U.S. withdraws from the pact,” says Sen. Max Baucus, co-chair of Farmers for Free Trade. “That’s because NAFTA withdrawal would result in a massive tax on the products U.S. farmers grow and produce.”  

Without NAFTA, cheese would face a tariff up to 45%. Based on 2016 cheese exports to Mexico totaling $170 million, the tariffs would add up to $76.5 million in additional duties without NAFTA.

Similarly, without NAFTA, beef would be subject to a 25% tariff. In 2016, the U.S. shipped $867 million of beef to Mexico. With a tariff in place, that would be $217 million in additional duties. Chicken and pork would also be more expensive, with tariffs costing $653 million and $130 million, respectively.

“It’s not only farmers who would pay the price for NAFTA withdrawal,” Baucus explains. “Rural communities, which run on the engine of the farm economy would suffer too.” He says if farmers make less money, they spend less at local stores and restaurants and contribute less to schools and community organizations. In addition, jobs throughout the agricultural sector including growers, harvesters, processors, packagers, grain elevator operators, railroad workers and truck drivers would suffer.

“The simple truth is that rural communities don’t function well when their economic engine is hurting,” Baucus says.

Can the President Really Pull Out of NAFTA?

For more than a year, President Donald Trump has threatened to pull out of the North American Free Trade Agreement (NAFTA). Many analysts say leaving the pact would be devastating to the U.S. economy. Does Trump have that authority?

“It is clear the president can take steps to start that process without a vote of Congress,” says Darci Vetter, former chief agricultural negotiator for the U.S. Trade Representative.

However, leaving won’t be easy. First, the president must give Canada and Mexico six months written notice of departure from the agreement. Then, Congress could stop him. Finally, NAFTA supporters on the Hill could block the repeal and get the courts involved.  
“There is some debate as to whether the reimposition of tariffs or taking back of certain laws would require Congressional approval or not,” Vetter says. “There’s a lot of discussion about what that withdraw process would look like and who can or who needs to be involved.”


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