Trump’s trade decisions and what it means for US grains
February 6, 2017
Newly-inaugurated President Donald Trump has already followed through with key campaign promises related to trade policy — moves that have rightfully caused concern among grain farmers whose price is being supported by robust export sales of this year.
Recently, the Administration announced it would aim to renegotiate the North American Free Trade Agreement with Canada and Mexico. The president signed an executive order to withdraw the U.S. from participation in the Trans-Pacific Partnership agreement negotiated with 11 other Pacific Rim countries.
These moves are intended to pave the way for new negotiations. However, in the short term — and coming soon after serious trade policy issues with China — they could severely curtail U.S. grain farmers' market access globally and open up existing export markets to new levels of competition.
TPP was the product of years of work and dedication on behalf of negotiators and stakeholders and stood to eliminate 18,000 taxes and barriers blocking the free flow of goods to 40 percent of the world's consumers.
The agreement also contained much more than just tariff reductions. Modernized rules of trade and sanitary/phytosanitary chapters were huge steps forward, and TPP was the first such trade agreement to address biotechnology.
NAFTA, enacted more than 20 years ago, is a landmark trade success story for U.S. agriculture, particularly grains.
Over the past two decades, U.S. agricultural exports to Canada and Mexico tripled and quintupled, respectively, according to the U.S. Chamber of Commerce. One in every 10 acres on American farms is planted to feed hungry Canadian and Mexicans.
According to the most recent numbers available from the U.S. Department of Agriculture, Mexico is the top market for U.S. corn while Canada ranks as the ninth largest customer. Mexico is also the second-largest customer for U.S. distiller's dried grains with solubles and U.S. sorghum and a leading buyer of U.S. barley.
In the 2015/2016 marketing year, U.S. exports of corn to Mexico and Canada totaled more than 14 million metric tons, a record high in the tenure of NAFTA, valued at $2.68 billion.
The U.S. Grains Council is working with the National Corn Growers Association, its additional sister grower associations and others in the agriculture community to follow and assess the proposed next steps by the Administration.
Moving forward, these groups will aim to work with the Administration to maintain and expand the benefits of existing or new trade dialogues, be they bilateral or multilateral.