President Trump’s relentless crusade against the North American Free Trade Agreement (NAFTA) is already creating trouble for a community the White House has long purported to champion: U.S. farmers.
An exclusive report from Reuters published on Thursday indicates that Mexican buyers are following through on their threats to shift away from U.S. suppliers. According to data from Mexico’s Agrifood and Fishery Information Service (SIAP), purchasers in the country imported ten times more corn from Brazil in 2017 — 583,000 metric tonnes, a 970 percent increase from 2016 — all purchases made in the last four months of the year.
That trend is on track to continue in 2018, with severe implications for the United States. Mexico is the top importer of U.S. corn and second biggest buyer of U.S. soybeans, making the country a crucial trade partner. But as negotiations over NAFTA have soured, Mexico has increasingly looked to South America instead.
“We bought from Brazil for two reasons,” Edmundo Miranda, commercial director of Mexican grain merchant Grupo Gramosa, told Reuters. “One, because it was competitive. Two, to see how practical and profitable it was to buy from Brazil or Argentina given the possibility of trade tariffs because of NAFTA renegotiations.”
Finalized in 1994, NAFTA has completely changed the way trade functions in North America, bringing the three nations together in one of the world’s most prominent partnerships. The deal has critics on all sides of the political spectrum, with many arguing NAFTA has cost U.S. workers jobs and others pointing to the human cost of prioritizing free trade over “fair” trade. But NAFTA has been a crucial tool in North America for more than 20 years; even harsh critics of the deal argue it should be reformed rather than scrapped altogether.
That’s a hard sell for Trump, who has called NAFTA the “worst trade deal ever.”
NAFTA renegotiation talks began last year, amid threats from the Trump administration to blow up the deal completely. That approach quickly presented problems — neither Canada nor Mexico have been receptive to U.S. demands, with Canadian Foreign Minister Chrystia Freeland taking a particularly terse tone on the “winner-take-all mindset” espoused by the White House.
Among other things, the United States is demanding a sunset clause mandating that NAFTA be renegotiated every five years; that North American automobiles contain 50 percent U.S. parts; and a rollback of dispute mechanisms. Those demands have been a non-starter, causing talks to stall and many to worry about their longterm viability.
Officials originally projected the renegotiation talks would end March 31, but now some speculate that they could stretch into next year.
The uncertainty isn’t good for international relations across North America, to say nothing of the U.S. economy. Farmers expressed their concerns to Reuters in January, amid falling soybean purchases and increasing indications of Mexico’s shift to Brazil. One farmer, 34-year-old Blake Erwin, told the outlet that any NAFTA renegotiation “has to be fair for the United States” but that agricultural efforts shouldn’t suffer in the process.
“We also want to keep those exports going for the farmer,” he said. “We don’t want to mess up any good things we got going.”
It might be too late for that. Mexico stands to lose the most if NAFTA disintegrates and the country has actively been looking elsewhere for other trading partners to bridge the gap. Historically, Mexico has purchased nearly 25 percent of U.S. corn exports, but Brazil offers cheaper prices and, many times, a better product overall, according to merchants.
“I have the American; I have the Brazilian and the Argentinian; which one do I buy from? The cheapest. If they’re at the same price, I’ll go for the Brazilian,” Alfredo Castillo, marketing manager of grain merchant Comercializadora Portimex, told Reuters.
The U.S. Grains Council — joined by the National Soybean Growers Association — has reportedly met multiple times with both Mexican buyers and government officials in an effort to maintain U.S.-Mexico trade relations. But Mexico has made it clear: with NAFTA stuttering and the Trump administration repeatedly lashing out at Mexico in particular, buyers don’t have much incentive to continue focusing on their northern neighbor.
All of this means U.S. farmers are likely to see an increasing dip in revenue. Kansas farmers told KSN last month that the potential collapse of NAFTA has left them terrified.
“If the U.S. would pull out of NAFTA, that would be very bad for the Kansas farmer and the Kansas economy,” Kearny County farmer Kyler Millershaski said.
A withdrawal could also cost Trump support from many voters who relied on his presidency to bolster their industries. “I think that would not be a good thing for his support,” said Millershaski of a potential end to the trade agreement.
Other farmers expressed similar sentiments. Michele Aavang told CGTN that the end of NAFTA has left her family in limbo.
“It would obviously curtail our exports. And that is just something we cannot afford at this time,” Aavang said. “Canada and Mexico are huge export markets for us. To have that pulled away would just be devastating.”