Lifted tariffs expected to smooth the way for USMCA

 

American Farm Bureau Federation President Zippy Duvall called the recent lifting of U.S. tariffs on steel and aluminum imports from Mexico and Canada—and elimination of retaliatory tariffs on U.S. agricultural products by those neighboring countries—welcome news.

The tariffs, he said, “are a drag on American farmers and ranchers at a time when they are suffering more economic difficulty than many can remember. Elimination of these tariffs should help pave the way for approval of the USMCA by Congress.”

With that barrier addressed, Duvall added, “we urge negotiators to continue their work toward re-opening markets with the European Union, China and Japan. The Farm Bureau believes in fair trade. Eliminating more tariffs and other trade barriers is critical to achieving that goal.”

The U.S., Mexico and Canada entered into NAFTA’s successor agreement in late 2018. NAFTA removed barriers to intraregional trade, resulting in a $30 billion increase in agricultural exports from the U.S. to Canada and Mexico between 1994 and 2017.

Virginia farmers rely “significantly” on export markets in Canada and Mexico, according to Tony Banks, a commodity marketing specialist for Virginia Farm Bureau Federation. “Elimination of the retaliatory tariffs will improve the outlook for many Virginia farm commodities, including poultry, pork, soybeans and grains. We are hopeful that Congress will continue with the next step and approve the trade agreement.”

A report by the International Trade Commission said the USMCA stands to increase U.S. agricultural exports by $2.2 billion once it is implemented.

Over time, “this will have those beneficial effects and be a good addition to what we already have in NAFTA with the new USMCA provisions,” noted Dave Salmonsen, AFBF senior director of Congressional relations.

USMCA changes sanitary and phytosanitary standards, biotech rules and other trade provisions. Salmonsen said the projected increase in ag exports also comes from quota changes.

“Part of the 2.2 billion was $435 million in, we think, new exports to Canada because they granted some more access; they raised the quotas. They wouldn’t get rid of their tariffs on dairy and poultry, which is their last remaining control they have over those imports, but they raised access, so we’ve got that.”