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· Trump’s Mexico tariff threat worries US farmers already pummeled by China trade war
· Possible Mexican retaliatory tariff list excludes U.S. corn: sources
Trump’s Mexico tariff threat worries US farmers already pummeled by China trade war
President Donald Trump’s threatened 5% tariff on all Mexican imports could hit American farmers especially hard if Mexico retaliates with punitive duties on U.S. agricultural products.
“Producers are extremely concerned about another potential trade retaliation from Mexico,” said National Pork Producers Council President David Herring.
Mexico is considered one of the most lucrative markets for American agriculture products given its easy access and close proximity to the U.S, whether via rail, ship or truck.
Jeff Daniels, CNBC
June 5, 2019
President Donald Trump’s threatened 5% tariff on all Mexican imports could hit American farmers especially hard if Mexico retaliates with punitive duties on U.S. agricultural products. Farmers are already reeling from Trump’s drawn out trade war with China and fear further losses could be in their futures.
“When you look at all the different products that the U.S. exports to Mexico, all those folks are getting nervous that retaliatory tariffs could certainly find their way onto their products,” said Veronica Nigh, an economist with the American Farm Bureau Federation, the nation’s largest farm sector organization.
Mexico is considered one of the most lucrative markets for American agriculture products given its easy access and close proximity to the U.S, whether via rail, ship or truck. Even so, that hasn’t stopped other countries from chipping away at American agricultural dominance when it comes to supplying its neighbor to the south with grains, meats and other farm products.
The U.S. exported $19 billion in agricultural exports to Mexico last year, making it the second-largest purchaser after Canada, according to the U.S. Department of Agriculture. Mexico is the top market for U.S. corn, rice, dairy products, poultry, eggs, pecans and also a major buyer of American beef, pork, soybeans and wheat.
Frustrated with Central American migration, the White House last Thursday announced the U.S. plans to slap 5% tariffs on Mexican goods, including cars, beer, tequila, as well as fruits and vegetables. The duties would start June 10 and gradually increase to 25% on Oct. 1 unless Mexico “substantially stops the illegal inflow of aliens coming through its territory.”
“If you put a tariff on imported goods, usually that price gets passed to consumers,” said Luis Ribera, an agricultural economist at Texas A&M University. “And you can expect that Mexico will retaliate one way or another.”
Mexican officials in Washington this week as part of a diplomatic push to avert new tariffs are warning the levies won’t stop the flow of migrants. Talks between U.S. and Mexican officials on Wednesday failed to produce a deal, a senior administration official told NBC News.
Trump slapped tariffs last year on imported steel and aluminum, resulting in Mexico imposing levies on $3 billion of U.S. goods, including a variety of agricultural products. The U.S. last month lifted metals tariffs against Mexico and Canada as part of a push to get ratification of the pending United States-Mexico-Canada Agreement.
However, Trump’s threat to impose new tariffs against Mexico over immigration puts USMCA in jeopardy and raises the risk of additional financial fallout for American farmers already hurting from the escalating trade war with China. The new USMCA is designed to replace the North American Free Trade Agreement, a 25-year-old pact between the U.S., Canada and Mexico.
“Producers are extremely concerned about another potential trade retaliation from Mexico,” said National Pork Producers Council President David Herring, a pork producer from North Carolina. “We just got away from the 20% punitive tariffs just a few weeks ago.”
Under NAFTA, the U.S. has enjoyed decades of zero-tariff pork trade with Mexico but the retaliatory levies imposed last year after the metals duties cost the American pork industry about $1.5 billion last year, according to Herring.
“Mexico is our top trade partner as far as U.S. pork by volume,” said Herring, adding that the industry exports about 30% of its product to Mexico.
But Mexico could boost pork exports from other suppliers, including Canada, Chile and European Union. The tariffs Mexico imposed last year on U.S. pork resulted in Canada boosting its shipments by about 20%.
Other global suppliers of pork to Mexico already have taken share away from the U.S. exporters in the past year and American executives concede the only reason more isn’t being lost is because the industry has accepted lower prices. The U.S. industry also has lost significant share in China due to the trade war and increased pork exports from Spain and other global suppliers.
As for corn...
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Possible Mexican retaliatory tariff list excludes U.S. corn: sources
Reporting by Frank Jack Daniel, Dave Graham and Anthony Esposito; Editing by Richard Chang and Peter Cooney, Reuters
June 5, 2019
MEXICO CITY (Reuters) - Mexico has prepared a list of U.S. products that could be hit in retaliation for possible Trump administration tariffs, with a focus on Republican-leaning agricultural states but excluding corn, one of Mexico’s biggest imports, officials said on Wednesday
U.S. President Donald Trump has pledged to apply a first round of tariffs on all Mexican imports next week if President Andres Manuel Lopez Obrador’s government does not stem the flow of mostly Central American migrants seeking entry to the United States.
Mexican officials met with their U.S. counterparts for talks in Washington on Wednesday aimed at reaching a deal to stave off the imposition of U.S. tariffs on Mexican goods.
Four government officials familiar with the situation, speaking on condition of anonymity because of the sensitivity of the matter, said the list, which three of the sources said was prepared by the economy ministry, was with Lopez Obrador’s office.
One source said the president’s office had not made a decision on retaliatory tariffs.
The products targeted are similar to those lined up in response to Trump’s steel and aluminum tariffs last year, and were principally tailored toward hitting the U.S. president’s electoral base, according to one of the sources.
That meant focusing on states that voted for Trump in 2016 where agriculture plays a major role in the local economy, as well as several industrial states, including Michigan, Pennsylvania and Ohio, the source added.
The list submitted to the president’s office excludes U.S. corn, two of the sources said. That could change in due course, one of the sources noted.
Mexico’s growing livestock industry relies on millions of tonnes of U.S.-grown yellow corn annually and industry experts say it would be extremely hard to quickly substitute the American imports with corn from other nations...