President Trump announced yesterday that he was backing off his threat to close the Mexican border. He is giving Mexico one year to reduce illegal immigrants and illegal drugs from entering the United States from Mexico. If this does not happen, he is threatening to impose tariffs on imported cars from Mexico and if that does not work, he will close the border.
Last Friday and again on Tuesday, he threatened to close the Mexican border because Mexico had not done enough to stop the large numbers of Central American asylum seekers from entering the United States through Mexico.
The business and agricultural communities immediately raised concerns of the economic harm this would cause if the president closed the border. It would have hit U.S. agricultural exports and would make it even more difficult for Congress to pass the U.S.-Mexico-Canada Agreement.
Two-way trade between the United States and Mexico is estimated at $611 billion of which $502 billion crosses the border by truck and rail. Mexico this year is expected to be the second largest market for U.S. agricultural exports. It represents 13% of all U.S. imports, especially fruits and vegetables.
The National Pork Producers Council urged the Trump administration to consider the fallout from cutting off trade between the United States and Mexico. The NPPC says, “A cloud of uncertainty and restricted access to our most important export markets have strained U.S. pork producers and their families for more than a year. The value of our exports to Mexico and China are down 28% and 32%, respectively, this year. We are at the breaking point and cannot afford a total loss of the Mexican market, one that accounted for more than 20% of total U.S. pork exports last year.”
In 2017, Mexico was the second largest market by both volume and third by value for U.S. beef exports. It is the No.1 export market by value and volume for U.S. poultry exports. Mexico is the largest market for U.S. corn and dairy and a major market for soybeans and wheat.
Japan trade negotiations to begin April 15
The negotiations between the United States and Japan are to begin April 15, according to various press reports. Agricultural groups have been urging the administration to begin these negotiations as quickly as possible because the United States is losing market share due to last year’s implementation of the Comprehensive and Progressive Agreement of Trans-Pacific Partnership and the Japan-EU trade agreement.
The NPPC is calling for the administration to send to Congress as soon as possible an agreement to ratify. NPPC says, “U.S. pork producers are losing market share in Japan to international competitors that have recently negotiated more favorable trade terms in our most valuable market. We are already seeing a decline in sales to Japan and will see market loss accelerate if we don’t quickly secure competitive access to Japan.”
The National Association of Wheat Growers has warned that U.S. wheat is losing sales and market share in Japan. NAWG estimates that U.S. wheat will cost about $20 per metric ton or 55 cents per bushel more than wheat from CPTTP countries and the European Union.
U.S. beef is losing sales because of the lack of a trade agreement with Japan. The tariff rate for U.S. beef is 38.5% and 26.6% for CPTPP countries and the EU.
Section 232 tariff reform
Sen. Chuck Grassley (R-IA) is leading an effort to reform the process by which the executive branch can use national security as a basis to restrict imports under Section 232 of the Trade Expansion Act of 1962. Legislation will be introduced which would require the executive branch to consult with Congress and provide reports on the achievement of any national security objectives plus the economic impact. Any restrictions imposed by the president would be limited to a defined period of time unless extended by Congress.
There has been growing concerns in Congress of President Trump’s use of Section 232 to impose tariffs and their effects on various industries. Sens. Pat Toomey (R-PA) and Mark Warner (D-VA), along with 10 other Senators have introduced the “Bicameral Congressional Trade Authority Act” that would ensure that tariffs are only imposed under Section 232 for truly national security purposes.
Groups ask Congress to support ag research
A coalition of agriculture, consumer and conservation groups are asking Congress to support agricultural research by funding USDA’s Agriculture and Food Research Initiative at $445 million for Fiscal Year ’20. AFRI provides competitive grants for research including in animal and plant production, water management, healthier soils and food safety.
The coalition, in a letter to the House and Senate Agricultural Appropriations Subcommittee, says, “The U.S. has lost its position as the top global funder of public agricultural R&D to China, which now spends double that of our nation. In the case of AFRI, this lack of funding has translated into support for only a quarter of the projects recommended by the program’s peer review panels.”
Those signing the letter include the NPPC, as well as the American Farm Bureau Federation, American Feed Industry Association, American Soybean Association, American Veterinary Medical Association, Consumer Federation of America, National Association of State Departments of Agriculture, National Cattlemen’s Beef Association, National Corn Growers Association, National Farmers Union and National Sustainable Agriculture Coalition.