Earlier this week, news outlets including CNN, CNBC, Politico and others reported President Trump plans to issue an executive order next week to withdraw from NAFTA. Farm groups were not pleased to hear the news.
"We are shocked and distressed to see news reports that the Trump Administration is considering an executive order to withdraw the United States from the North American Free Trade Agreement (NAFTA),” says the U.S. Grains Council. "An executive order as reported will have an immediate effect on sales to Mexico, market prices and the profitability of U.S. farmers, who are already facing below cost of production prices.”
Although the president does have the power to withdraw from the agreement, it is unclear how swift the process would be and how the decision would impact the North American Free Trade Agreement Implementation Act. According to White & Case, a law firm specializing in free trade agreements, the NAFTA Act would limit how high the president can raise tariffs. Regardless of the logistics, farm groups agree withdrawing from NAFTA would be bad for agriculture.
"Withdrawing from NAFTA would be disastrous for American agriculture,” says the National Corn Growers Association. “We cannot disrupt trade with two of our top trade partners and allies. This decision will cost America's farmers and ranchers markets that we will never recover.”
NCGA emphasized how beneficial NAFTA has been for farm country, adding that corn and corn product exports account for 31% of farmer income.
“Mexico is the top export market for corn,” the group notes. “Canada is also a top market for corn and ethanol. With a farm economy that is already weak, losing access to these markets will be a huge blow that will be felt throughout the ag value chain.”
The U.S. Wheat Association and National Wheat Growers Association say instead of withdrawal, the administration should be focused on renegotiation.
“[We] understand that there are several elements of the trade agreement that could be re-examined and modernized. However, we believe withdrawing from NAFTA would be a serious mistake,” the groups point out. “It could lead to new tariffs on U.S. wheat and threaten to undermine the long-standing, loyal relationship U.S. wheat farmers have built with Mexico’s wheat buyers and food industry.”
Even though the White House has yet to confirm these reports of the proposed NAFTA executive order, recent tension with both Canada and Mexico could still lead to withdrawal from the agreement.