Retaliatory Tariffs Will Hurt Farmers

Shortly after the White House announced the imposition of steel tariffs on Mexico, Canada and the EU, threats of retaliatory tariffs ensued, many of which will hurt farmers.

Because President Trump had previously made threats of these tariffs, our trading partners are prepared to retaliate. The EU has announced $3.3 billion in push back sanctions that will limit the damage to the European bloc but maximize the impact on U.S. products, likely include farm products. 

Canadian foreign affairs minister Chrystia Freeland, who according to Pro Farmer’s Jim Wiesemeyer pushed the steel and North American Free Trade Agreement (NAFTA) issues during her Tuesday meeting on Tuesday with U.S. Trade Representative Robert Lighthizer, made it clear earlier in the week that Canada would retaliate if the duties are imposed.

Still, the Trump administration moved forward, slapping duties of 25% on steel and 10% on aluminum.

“Trump's well-known bark now has some bite if the duties are implemented at midnight as Ross noted,” Wiesemeyer says. “And, other countries besides the EU, Canada and Mexico could join the retaliation group.” 

Commerce Department data shows Canada is the top source of U.S. imports of steel and aluminum. Mexico is the fourth-largest provider of steel and 10th-largest of supplier of aluminum to the U.S. 

“While all of the countries are big players in the steel market, companies have forward bought needed supplies, so any [steel] market impact could be tempered,” Wiesemeyer explains. 

Unfortunately, the impact on farmers probably won’t be tempered. Mexico placed retaliatory tariffs on many agricultural goods. 

“Faced with tariffs imposed by the U.S., Mexico will impose equivalent measures to various products such as flat steel (hot and cold foil, including coated and various tubes), lamps, pork legs and shoulders, sausages and food preparations, apples, grapes, blueberries, various cheeses, among others,” the government of Mexico said in a May 31 statement.

Farm Journal’s PORK reports the tariffs could result in considerable pain for pork producers. 

 “Global export market uncertainty has resulted in considerable lost value for U.S. pork producers,” says Jim Heimerl, president of the National Pork Producers Council and a hog farmer from Johnstown, Ohio.

Canada’s list of countermeasures, according to the Department of Finance Canada, included tariffs on U.S. steel and aluminum and a wide array of consumer goods. Our friends at The Packer report cucumbers were the only U.S. fresh produce commodity, with a 10% tariff. However, Mexico’s fruit tariffs could significantly hurt Washington apple farms. 

Washington apple growers send more than $200 million per year in apple exports to Mexico, the state’s top export market, says Mark Powers, president of the of the Yakima, Wash.-based Northwest Horticultural Council.

Dairy producers also stand to lose under the retaliatory tariff’s, Farm Journal’s MILK reports. Mexico is the No. 1 export destination for dairy products. In March alone, the U.S. sent 8,706 metric tons of cheese to Mexico, roughly 2,000 tons more than the next closest market South Korea. 

“Farmers are busy with planting season but are moving forward without knowing who will buy their crop when it’s harvested later this year,” says Kevin Skunes president of the National Corn Growers Association. “With a 52 percent drop in net farm income over the last five years and depressed commodity prices, this is not the time to face such a burden. This uncertainty impacts every step of the agriculture economy, from securing financing to marketing.”

Amid concerns of price sways, there’s also concern over how these tariffs will influence ongoing talks to renegotiate the North American Free Trade Agreement (NAFTA). 

“The Administration’s decision to move forward with sweeping tariffs on steel and aluminum imports from our closest trading partners is a one-two punch for the millions of farmers and families who rely on these critical markets every day,” says Casey Guernsey, former Missouri state legislator and spokesman for Americans For Farms and Families. “Not only will these tariffs threaten rural Americans’ ability to sell their homegrown goods with key U.S. allies – it puts the future of the North American Free Trade Agreement (NAFTA) in jeopardy. As we continue to grapple with the inevitable retaliation from China as a result of more U.S. tariffs, the last thing we need is more uncertainty or retaliation from Mexico, Canada and the European Union.” 

Still, these tariffs don’t necessarily mean NAFTA is off the table, according to Wiesemeyer. 

“The U.S. duties do not mean talks are dead,” he says. “The development, however, shows that the more aggressive policy types have the upper hand in the White House and Trump's ear, but the duties can always be lifted if a NAFTA 2.0 deal is officially confirmed. Canada and Mexico had previously received temporary exemptions from the tariffs while U.S. trade officials sought better terms on a new NAFTA.”