Iowa agriculture: New NAFTA will not repair tariff damage

Iowa agriculture experts are saying that due to tariffs on steel, aluminum, and pork, the new version of NAFTA, the United States-Mexico-Canada Agreement, will not be able to displace the damage — even if it is ratified.

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Iowa agriculture: New NAFTA will not repair tariff damage

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Julia Shanahan, Politics Reporter

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Roughly two months after President Trump and leaders from Canada and Mexico signed the United States-Mexico-Canada Agreement, Iowa agriculture experts say the damage done by steel and aluminum tariffs will not be outweighed by the small benefits in the new trade agreement — even if it’s ratified.

Dermot Hayes, an Iowa State University agronomics professor, said the only major benefit Iowa agriculture would gain from the the new NAFTA is that Canada would open its dairy and poultry markets, allowing the U.S. access to up to 3.6 percent of Canada’s dairy market. Canadian experts note that had the U.S. remained in the Trans Pacific trade deal, the U.S. would have had the same access.

“Three percent is nothing,” Hayes said. “The beneficial impact on ag was very very minor.”

After Trump signed the new trade deal, he called it one of the “most important and largest trade deals in U.S. and world history.”

Although the agreement has been signed by the presidents of all three countries, it still must be ratified by the lawmaking bodies of each nation before it can go into effect. Currently, the three countries are operating under the old NAFTA.

The new deal came after the Trump administration announced in May 2018  it would impose a 25 percent tariff on imports of Canadian and Mexican steel and a 10 percent tariff on aluminum imports. In response, Canada imposed a retaliatory tariff on U.S. steel and aluminum.

Mexico responded with a 20 percent retaliatory tariff on U.S. pork in June 2018, which, according to data from Hayes, is approximately $12 per animal for Iowa pork producers and producers across the country.

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“The impact on having to pay a 20 percent duty on pork going to Mexico has been very damaging to the U.S. pork industry,” Hayes said. “The damage caused by the tariffs have far outweigh the very modest additional access we have in Canada.”

The impact on having to pay a 20 percent duty on pork going to Mexico has been very damaging to the U.S. pork industry.”

— Dermot Hayes

Sen. Chuck Grassley, R-Iowa, said on Wednesday in a news release that before Congress considers implementing the new NAFTA, the Trump administration should lift the steel and aluminum tariffs on Canada and Mexico. Grassley cited the research done by Hayes, noting that Iowa farmers need relief from Canadian, Mexican, and Chinese tariffs.

Dal Grooms, the communications director for the Iowa Pork Producers, said it supports the new trade deal, but officials are concerned that the tariffs are still in place, even after Trump signed the deal.

“As long as those tariffs stay in place, Mexico and Canada are both going to continue to put tariffs on U.S. pork,” Grooms said.

She agrees that the new trade deal will not be able to repair the damage that the tariffs have done.

“We hope Congress ratifies [the new deal], and we hope the administration agrees to lift those tariffs,” Grooms said.

Mark Recker, a board member of the Iowa Corn Association and a corn and soybean farmer in northeast Iowa, said the steel and aluminum tariffs have raised prices on essential equipment to store grain and other metal equipment.

Recker said that because the new agreement has not yet passed Congress, he’s worried that Trump could completely withdraw from it, and then there would be no agreement among the three countries.

“The president has threatened to withdraw from the original NAFTA agreement, and that could create a very difficult situation for farmers because that could take away our ability to import or export products to Mexico and Canada,” Recker said. “We’d really like to see an agreement in place.”

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