Mexico

Water Fight With Mexico Leaves South Texas Farmer Unable to Plant Half His Acres

Mon, 22 Dec 2025 19:37:23 GMT

For South Texas farmers, the ongoing water dispute between the United States and Mexico isn’t an abstract policy issue. It’s a crisis that has reshaped planting decisions, reduced production and injected deep uncertainty into every growing season along the Rio Grande.

Brian Jones, a South Texas farmer, says years of shorted water deliveries under the 1944 Water Treaty have forced him and many of his neighbors to dramatically scale back their operations. What once was a fully irrigated farming system has turned into a constant struggle to stretch limited water supplies across fewer acres.

“I believe it really starts to reach a crescendo in the 2023 crop year,” Jones says. “For 2024 and 2025, basically I’m only able to plant half of my farm because we don’t have enough water.”

Jones says the water shortages are not the result of drought alone, but of Mexico failing to live up to its treaty obligations. Under the 1944 agreement, Mexico is required to deliver water to the United States through the Rio Grande basin. However, U.S. officials and South Texas producers argue those deliveries have fallen well short in recent years.

“That’s exactly right,” Jones says, confirming that he has been unable to plant roughly half of his acres. “Going from fully irrigated to basically only being able to plant half the farm — and not even having full irrigation for that half — has been quite a struggle over the last couple of years.”

The reduced water supply has forced farmers to make hard decisions, prioritizing which crops and fields can survive with limited irrigation. Jones says even the acres that do get planted are often under-irrigated, increasing risk and lowering yield potential.

“Mexico has willfully held back water that they had,” Jones says. “That puts us in a huge shortfall.”

Hope on the Horizon?

Earlier this month, USDA announced it had reached an understanding with Mexico to release 202,000 acre-feet of water to the U.S., following heightened pressure from the Trump administration — including threats of tariffs if Mexico failed to comply. The announcement marked the most significant movement on the issue in years. But for growers on the ground, the news has been met with cautious optimism.

“I would say I’m both hopeful and skeptical,” Jones says. “I’m hopeful because President Trump and his administration really take the bull by the horns on this and bring the fight to Mexico.”

Jones says farmers in South Texas have long felt ignored as water shortages worsened, and he credits the current administration for taking a more aggressive stance.

“Under the previous administration, it’s like talking to a brick wall,” he says. “Under this administration, President Trump and Secretary Rollins really pick up the club and use it to bring Mexico to the table.”

Despite the agreement, Jones says trust remains an issue. Years of unmet commitments have made farmers wary of celebrating until water is actually flowing into the Rio Grande and irrigation systems.

“On the other hand, I’m still skeptical because Mexico has willfully withheld the water for a number of years,” Jones says. “Until it really starts flowing and they meet that full agreement of the 202,000 acre-feet, we’re still skeptical.”

Water Releases Reported to Start Immediately

According to Jones, Mexico indicates water releases should begin immediately, though geography and infrastructure mean the impact is not instantaneous for South Texas farmers.

“It should start this week,” he says. “It takes about three to four days for the water, once they release it in the lower parts of Mexico, to reach the Rio Grande. Hopefully by now, we start seeing that flow.”

Beyond the immediate relief, Jones says the water dispute highlights deeper concerns about fairness and competition. He believes the issue should be addressed in broader trade discussions, particularly as the U.S. reviews the U.S.-Mexico-Canada Agreement (USMCA).

“We actually hope it is a point of contention,” Jones says. “Not only is Mexico withholding water, they’re using that water to grow products we normally grow here in South Texas and compete directly in our marketing window. That creates a trade imbalance.”

Water Issue Could Be at the Center of USCMA Review

Jones says Texas lawmakers and agricultural groups are pushing to bring the issue into USMCA negotiations, arguing water compliance should carry real consequences.

“We’re hoping to use USMCA as a tool to put some punitive measures and some teeth into the water-sharing agreement,” he says.

Planting Decisions Uncertain

As planting season approaches, uncertainty remains front and center. Jones says decisions for the 2025 crop year will hinge almost entirely on whether Mexico follows through on its promises — and how quickly water arrives.

“We’re about 45 days from corn planting here in South Texas,” he says. “I’ll definitely get all my corn in, then switch over to milo. Cotton is the big question mark.”

Cotton planting typically begins in mid-March, leaving little margin for error if water deliveries fall behind schedule.

“All the details are supposed to be out by January 31, and they’re guaranteeing all that water by the end of March,” Jones says. “By early- to mid-March, we should know where they stand on deliveries, and that will shape how I plant this upcoming year.”

For now, Jones and other South Texas farmers are watching river levels, weather forecasts and diplomatic negotiations with equal intensity — hoping that this time, the water fight turns into real relief on the ground.

Details Unclear on Promised Water Deliveries From Mexico

Mon, 15 Dec 2025 20:52:32 GMT

Texas will supposedly get up to 202,000 acre-feet of water from Mexico in accordance with the 1944 Treaty beginning this week, the week of Dec. 15, according to the USDA.

However, it is unclear where this water will come from because Mexico doesn’t have that volume of water in its international holdings. Depending upon source, it is also unclear how useful this release will be to Texas agriculture.

“They don’t have a whole lot of the international storage and international reservoirs,” says Sonny Hinojosa, current water advocate and former general manager at the Hidalgo County Irrigation District No. 2 in San Juan, Texas. He does note Mexico has some water in its internal reservoirs, however.

During her daily morning address on Dec. 15, Mexico’s president, Claudia Sheinbaum, told the press “we are not giving away water that we don’t have or that would affect the Mexican people.”

Backstory to the 202,000-acre-feet announcement

USDA’s Dec. 12^th announcement was the main outcome of a series of meetings between the U.S. and Mexico that was kicked off on the afternoon of Dec. 8, when President Donald Trump demanded Mexico release 200,000 acre-feet of water by Dec. 31 on threat of an additional 5% tariff in a Truth Social post.

“Mexico continues to violate our comprehensive Water Treaty, and this violation is seriously hurting our beautiful Texas crops and livestock,” he wrote.

President Donald Trump’s Dec. 8 Truth Social post.

(Screen capture)

This is a reference to Mexico’s failure to deliver 1.75 million acre-feet of water to Texas via the Rio Grande by the end of the most recent five-year cycle, which ended on Oct. 24. According to the 1944 treaty, when Mexico fails to deliver the full amount within the five-year cycle, the remainder is carried over into the next cycle as debt. Water debt must be paid in addition to the current cycle’s volume.

USDA’s Dec. 12^th announcement included that there are ongoing negotiations between the countries to finalize a plan by the end of January 2026 for Mexico to repay its outstanding water debt of roughly 800,000 acre-feet.

Appreciation from Texas

The announcement was widely welcomed by Texas agricultural groups.

“I applaud President Trump for putting American farmers first and holding Mexico’s feet to the fire to get this treaty honored,” said Texas’ Agriculture Commissioner Sid Miller in an announcement on Dec. 14.

“For years, producers in the Rio Grande Basin have been shorted the water they are legally owed, causing the loss of crops, jobs, industries, and livelihoods,” he added. “Let me be clear: Texas farmers expect Mexico to fully meet its obligations — not just today, but for years to come. Water is the lifeblood of agriculture.”

In a letter to the editor sent out midday Dec. 15, various Texas produce and row crop groups expressed gratitude to the Trump administration, including U.S. Secretary of Agriculture Brooke Rollins and U.S. Deputy Secretary of State Christopher Landau. But the co-signed groups and their leaders also urged quick implementation and consequences for inaction.

“While Mexico did deliver some water this year, thanks to pressure by the Trump administration, it was not enough to cover the debt,” wrote Dante Galeazzi, president and CEO of the Texas International Produce Association.

“This new understanding must be quickly implemented. The U.S. must not allow Mexico to delay fulfilling its obligations, or it risks Mexico overusing water resources that should be shared. A tactic taken by Mexico for years without penalty or accountability,” Galeazzi continued.

Dale Murden, president of Texas Citrus Mutual, similarly applauded the move, but urged the administration to push Mexico to “honor this new agreement or face consequences.”

“The short- and long-term impacts on Texas farmers are beyond the data on paper,” Murden wrote. “Livelihoods have been uprooted, and the region’s agricultural landscape may never be the same again. Meanwhile, Mexico continues to expand its agricultural production that directly competes with U.S. producers … with water that should have been delivered to the U.S.”

Where will that water come from?

The co-signed groups and Hinojosa, who helped provide data for the meetings held between the U.S. and Mexico, all noted details from USDA on this new water transfer are currently unknown. What is known is that Mexico doesn’t have 202,000 acre-feet of water in the international dams.

According to public records (based on Nov. 29 conditions, most recent) from the International Boundary and Water Commission, the U.S. side of the group that adjudicates the water treaties between the U.S. and Mexico, Mexico’s water ownership at the Amistad and Falcon dams amounts to just under 166,000 acre-feet.

The Rio Grande reservoirs and tributaries in Mexico. From pg. 4 of Assistant Rio Grande Watermaster Jose A. Davila’s 2023 presentation for the Texas Commission on Environmental Quality.

(Image and presentation from the U.S. International Boundary and Water Commission)

Sheinbaum told reporters Dec. 15 that Mexico “examined different river basins to determine how we could meet the United States’ request.”

Hinojosa reports hearing that the near-term repayment could include water from the Rio San Juan, which fits with Sheinbaum’s description. However, the Rio San Juan is not one of the original six Rio Grande tributaries covered by the 1944 treaty. It is also a problematic source, according to Hinojosa.

“We can’t capture or store that water,” he said. This means that such water would be of little use to farmers, but could be used for municipal purposes. “We’ve utilized it in the past, but [Mexico has] restrictions as far as what they can release.”

Those restrictions mean that the full 202,000 acre-feet could not come from that source alone, and certainly not by the end of December. Regardless, the agreement could be too little, too late for Texas growers who have already suffered tremendous losses, Hinojosa said.

“Once again, our spring crops are planted in late February, and I know our farmers; they’re not going to go on a limb and invest unless they know that we have the water,” he said. “So we might be looking at a fourth year of limited row crops. Now, if this continues and we get that 202,000 acre-feet, maybe it’ll help our vegetable farmers come next September or October, but we’ll be facing a fourth year of shortage.”

Mexico’s perspective

The U.S. and Mexico do not agree on the why behind the short water deliveries. While stakeholders on the U.S. side have pointed to growth of Mexico’s, especially Chihuahua’s, irrigated agriculture in recent years, Mexico has given a variety of reasons for not delivering sufficient water in a timely way.

During her Dec. 9 press meeting , Sheinbaum summarized the reasons why Mexico had not delivered more water in the past cycle as two-fold; Mexico’s own water needs and the limiting factor of the pipeline that carries water to the Rio Grande. However, she said the governors of the Mexican states, including Chihuahua, are united “to find the best agreement with the United States.”

On Dec. 15^th, she answered questions specifically about the details of the meetings, saying: “[the U.S.] requested that a certain amount of water be delivered by December, and we said that this was not possible, not only because it’s physically impossible, but also because it would have consequences if done in such a short time. So, an agreement was reached to deliver it over a longer period.”

She also cited drought and lack of rain in Mexico.

“So, an agreement was reached in this regard,” she said. “The agreement is typically for a five-year period, but now we will determine, based on the amount of rainfall during the rainy season, how to make up for the water that wasn’t delivered in the previous five years due to the drought.”

Sheinbaum also brought up the possibility that the 1944 Treaty, which she noted is very favorable to Mexico, might need to be renegotiated.

“Various experts say that Mexico may no longer be able to comply with this treaty, since the exceptional drought provision has been invoked in the last three cycles,” she said on Dec. 10. “It seems that the drought situation, or the lack of water to comply with the treaty, is no longer an exceptional one, but rather a reality.”

No Trade Agreement Can Boast the Success of USMCA, The Meat Institute Says

Tue, 04 Nov 2025 14:48:28 GMT

The Meat Institute is calling on the Trump administration to renew the U.S.-Mexico-Canada Agreement (USMCA) for its benefits to American meat and poultry companies and the entire U.S. animal protein value chain.

“USMCA has been a boon for the American meat, livestock and poultry sector, along with the broader American food and agriculture economy and ancillary industries,” said Julie Anna Potts, The Meat Institute president and CEO, in a news release. “It has provided steady income to American farmers, ranchers, and meat and poultry exporters; it has created jobs for American truck drivers, ports, and transportation companies; it has strengthened American food retail and food service establishments; and it has accomplished all of this through transparent rules that allow American businesses to proactively plan supply chains and develop durable customer relationships.”

USMCA entered into force on July 1, 2020, substituting the North America Free Trade Agreement (NAFTA) to create more balanced, reciprocal trade supporting high-paying jobs for Americans and grow the North American economy, according to the Office of the United States Trade Representative (USTR) .

“The domestic U.S. meat and poultry industry’s long-term economic viability, though, depends on robust international trade, particularly as domestic per capita consumption of meat and poultry remains stable, and 95% of consumers live outside the U.S,” The Meat Institute wrote in comments submitted to the USTR on Nov. 3. “International trade is, therefore, vital to the long-term strength of the U.S. meat and poultry industry, the American workers it supports, and the rural and farm communities it sustains.”

In 2024, U.S. meat and poultry exports exceeded $24.6 billion. Meat and poultry product exports to Canada and Mexico accounted for $7.5 billion of that total. Annually, approximately 14% of U.S. beef production, 15% of U.S. poultry production and 25% of U.S. pork production are exported, the organization noted. As well, exports add value to every animal produced, and in turn, increase demand for U.S. corn and soybeans.

“The Trump Administration’s America First Trade Policy Agenda has reinvigorated American trade policy and has reasserted American leadership to advance U.S. meat, poultry, food, and agriculture trade in a manner that revitalizes our farm communities and supports broad-based economic growth. President Trump’s negotiation of the USMCA during his first term resulted in the world’s gold-standard trade agreement,” the letter said. “Thanks to President Trump’s leadership, USMCA has bolstered U.S. meat, poultry, and livestock trade, has led to increased market integration in North America, and must be preserved without significant changes that would disrupt the U.S. meat and poultry industry’s substantial access to the Canadian and Mexican markets.”

The Meat Institute says it’s clear USMCA’s access terms – zero tariffs on most meat, poultry and livestock trade – have underpinned American economic and job growth, particularly in rural and farm communities across the U.S.

“No other trade agreement can boast the same success,” Potts said. “President Trump deserves enormous credit for this extraordinary achievement.”

See The Meat Institute’s full comments in response to the U.S. Trade Representative’s (USTR) “Request for Comments on the Operation of the Agreement Between the United States of America, the United Mexican States, and Canada.”

What Farm Equipment Manufacturers Are Saying About 50% Steel and Aluminum Tariffs

Thu, 04 Sep 2025 17:15:53 GMT

Farm equipment manufacturers have spent the past nine months dealing with tariff fallout and implications. It’s an effort borne out of sheer necessity — that’s because the various tariff levels and targets have changed faster than a Kansas prairie headwind during spring planting.

It’s why we talked with executives from a handful of farm equipment manufacturers to learn more about how they are managing the situation. John Deere, for example, recently went as far as attaching a hard number to the tariff pain: a projected $600 million in balance sheet impact for 2025 is the figure shared by John Beal, director of investor relations, during Deere’s 2025 Q3 earnings call.

On Aug. 18, a 50% tariff on all foreign steel and aluminum imports into the U.S. went into effect. That alone has had a huge impact on the companies building farm machines here in the U.S. and abroad, and it’s even restricting the movement of used farm equipment across the border.

Almost All American Made

Case IH’s Kurt Coffey, who serves as the companies’ vice president of its North America division, says the executive team he is on meets daily to unpack global trade developments. Case IH is in a good position overall, he says, with 80% to 90% of its machines produced in one of four U.S. production facilities, and 95% of its machinery base material (i.e. steel) sourced domestically.

Related - From the Factory to Your Fields: Where Farm Equipment Is Made

(Case IH)

“What we’re trying to do is scale across our business to where there are impacts in the short term, in the transitory period, and make sure that we continue to flow product so we’re a reliable partner for our customers,” Coffey says. “But it is anybody’s guess where this is going. So, we’re maintaining focus on the customer and our supply flows.”

That supply flow is worth the extra effort in Racine, according to Coffey, due to this fact: Anywhere from 60% to 90% of Case IH machinery is presold, so a new tariff today means a big, unexpected extra cost tacked on the back end.

“We’re executing on product that was sold three, five or even eight months ago,” he adds. “So, no comment on [financial] impacts, but we’ve continued to focus on how we make sure our customers have what they need as they’re going to harvest.”

Coffey doesn’t come right out and say it, but reading between the lines, it seems clear that Case IH has had to flex its creative muscles and figure out how to manage, for example, a new 50% tariff bill on a brand-new AF-11 combine that was sold six months ago. That extra 50% wasn’t part of the equation when the deal was signed, so who pays for it?

More EU Than U.S.

While Case IH has a large manufacturing base in the U.S., German-based manufacturer Claas is a different story. While the company builds its Lexion combines and self-propelled corn detassler machine at a 250,000-sq.-ft. facility in Omaha, Neb., four-fifths (80%) of its row crop machinery portfolio is built over in Europe and shipped to dealer lots in the U.S.

In a Trump Tariff world, that means significantly higher production costs for Claas, and potentially, the farmers that buy their tractors and combines. That’s because tariffs are taxes, and most companies will pass that extra cost down the line to consumers in the form of higher retail prices.

Eric Raby, senior vice president of the Americas region, Claas, says his outfit is actually taking on some of those extra costs.

(Claas)

“From an EU [European Union] perspective, and in Canada and some other major countries, we’re pretty even keel right now on where the tariffs are, and I think the industry as a whole has pretty much absorbed [a lot of] those,” he says. “We’ve absorbed a lot, as well. We’re not passing all of it to the customer.”

The new-ish 50% tariff on steel and aluminum is a different story, however.

“We’re still working [on that] right now and trying to figure out the implications, because that really is going to affect our industry much more broadly than just the tariffs on a country of origin for a specific machine,” Raby says. “We’re always looking for local [material] suppliers as well, because our time to market gets shortened considerably. So, it’s much more efficient for us as well.”

One way to manage those costs is to onshore more of its material sourcing network here into the U.S. We visited Claas’ Omaha factory this summer, and efforts were already underway to find more suppliers in Nebraska and the Midwest.

“We’re always looking at broadening our supplier base,” Raby says. “If we go back to COVID, I think the whole industry suffered from a lack of versatility within the supply chain. So we’re always looking for different suppliers. And then obviously, with the tariffs now, we’re looking even more intently on sourcing locally.”

Nearly 50/50

New Holland is largely viewed as a Euro-brand in farm equipment circles, but it’s closer to an even split. The company manufactures about 50% of it’s row-crop machinery in the EU and 40% in North America, with the remaining 10% built in the Asia-Pacific region.

JEAN-MARC GIUBOUX PHOTOGRAPHY

(New Holland)

New Holland’s vice president of North America, Ryan Schaefer, has been in the leadership role for the brand’s domestic operations for about a year now. He says CNH Industrial has eight manufacturing plants in the U.S. as well as a significant presence in western Canada, but managing the tariff situation has been anything but easy, he says.

“We produce tractors and combines all over the world, as well, so we truly have a global footprint,” he says. “So really, I wouldn’t go so far as to call the situation difficult, but the challenges are something that many in our industry have never had to deal with firsthand. It’s been a learning experience for all manufacturers, I would say, throughout North America and the globe.”

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Mexico Probably Won’t Deliver All the Water it Owes

Mon, 25 Aug 2025 14:41:29 GMT

Mexico has two months left to deliver almost 1 million acre-feet of water to the U.S., but all that water probably won’t be coming, according to U.S. experts.

“Barring some kind of tropical system, that’s not going to happen,” says Sonny Hinojosa, current water advocate and former general manager at the Hidalgo County Irrigation District No. 2 in San Juan, Texas.

According to the 1944 treaty that governs water sharing between the U.S. and Mexico , Mexico must deliver 1.75 million acre-feet of water from the Rio Grande into Texas every five years. The current cycle ends October 25. As of Aug. 25, it only delivered 747,982 acre-feet , 43% of the total.

“The only thing that can bail Mexico out is a tropical system,” Hinojosa says. “Now, this is a monsoon season in northwest Mexico and west Texas, so we’re still hopeful to get some precipitation, but that still may or may not be enough to get us 100% of the water that we need.”

The deliveries of water from Mexico the the U.S. on the Rio Grande as of Aug. 25, 2025, from the International Boundary and Water Commission.

(Chart from International Boundary and Water Commission)

Hoping for a hurricane

Ideally, Mexico should deliver 350,000 acre-feet of water to the Rio Grande for Texas annually to reach the five-year total of 1.75 million acre-feet. But the 1944 treaty allows deliveries to run on the five-year cycle in the case of extraordinary drought. Mexico has been citing this provision and delivering water later and later in the cycle , often getting into “water debt” by not delivering enough on time.

In the past few cycles, late-cycle hurricanes bumped up deliveries. In the last cycle, which ended on Oct. 24, 2020, Mexico made the total 1.75 million acre-feet in the last days due to a heavy weather event.

The last time Mexico delivered roughly a million-acre feet of water in a couple months — what’s needed now — was at the end of 2010 as a result of Hurricane Alex that hit Mexico in late June.

“That’s the last time our reservoirs were full,” Hinojosa says.

The recent history of water delivery cycles from Mexico to the U.S. on the Rio Grande as recorded by the International Boundary and Water Commission. The mostly-vertical lime green line on the far left of the chart is shows the impact of Hurricane Alex in 2010.

(Chart from the International Boundary and Water Commission)

Alex was a just-in-time hurricane for Texas as well. Hinojosa explains those full reservoirs in late 2010 protected the state’s agriculture while it was deep in drought in 2011 and 2012. But by 2013, the water had again run out.

“It’s horrible to hope for a hurricane, but sometimes it seems to be what we need to get us caught up,” says Troy Allen, general manager of the Delta Lake Irrigation District in Edcouch, Texas.

“We don’t want the devastating ones that kill people,” he adds. “But if we do not get a hurricane this year in the watershed area, it’s going to be very rough come next year.”

Lucas Gregory, associate director and chief science officer of the Texas Water Resources Institute, says the best-case scenario “would be for a system to move pretty far inland and rain up in the mountains, in Chihuahua and the Rio Conchos watershed. That’s upstream of Amistad [International Reservoir], and that’s where the best storage capacity is.”

It’s not just a drought problem

However, there’s far more than drought going on in the situation between Mexico and Texas.

Gregory highlights issues such as growing metro populations on both sides of the Rio Grande and the impacts of climate change as contributing factors.

“But the ability of Mexico to store water in country is improved,” he adds. “They’ve built a lot more reservoirs in more recent history than the U.S. has, so now they can actually hold that water there and use it for themselves.”

Hinojosa says Mexico has built eight reservoirs since the 1944 treaty. Most were built along the Rio Conchos, a major tributary that delivers a lot of water to the Rio Grande — or used to, he says.

“Now they’re capturing it and using all the water for their expanded irrigation,” Gregory adds. “They’re basically irrigating desert with our water.”

Every source The Packer talked to pointed to the expansion of Mexico’s agriculture as a reason the U.S. is not getting the water it’s owed. This is particularly the case in the dry state of Chihuahua, and especially problematic with permanent, water-hungry crops like pecans.

Hinojosa points to the signing of the North American Free Trade Agreement as when the problems started.

“It opened the doors for Mexico, mainly Chihuahua, to expand their irrigated agriculture into the desert using water that used to flow into the Rio Grande,” he explains.

“They’re using our water, and I say ‘our water’ because it’s rightfully ours,” he continues. “They’re capturing that water, storing it, using it to grow crops and then bringing them to the U.S. for us. And they’re killing our farmers. They’re killing our market.”

The impact on Texas growers

Since Mexico has only delivered roughly two years’ worth of water over the course of five years, Texas farmers and growers have been in a tough place for a while. Allen explains that his growers have been “on allocation” since April of 2023, while others in neighboring irrigation districts have enforced it since 2022.

“Meaning that they’ve told their farmers they are only going to get X number of irrigations,” he says. He calls the situation unprecedented in his 22 years at the district.

“It’s been very difficult for my farmers,” he adds, saying it is especially “looking pretty scary for the citrus farmers.”

Dante Galeazzi, president and CEO of the Texas International Produce Association, says Texas produce growers in particular are going to have to make some tough decisions.

“What it means this coming season is our growers are going to continue to veer away from water-intensive crops,” he says. “They’re not going to put in broccoli. They’re not going to put in celery. They’re probably not going to take a lot of chances on new commodities. They’re going to double down on what they know works.”

Those produce standbys will likely be crops like cabbage, onions, carrots and established citrus like oranges and grapefruit, he says. But the potential loss of produce diversity comes with its own problems.

“The diversity, the variety, the trying new things — that’s what has always helped South Texas be a region that provides commercial volumes of fresh fruits and vegetables,” Galeazzi stresses. But, without assurances about water availability, growers will likely stay in the safe lane, he adds.

“The safe lane is great, but the safe lane isn’t always profitable, and that’s challenging because now you’re coming off of two years where profits have been cut into if there’s even profits. And now, you’re about to go into year three of pretty similar conditions. It’s gut wrenching.”

What’s likely to happen in the next two months

Though Texas probably won’t get the full volume of water owed by Mexico, it will likely get some additional water this cycle. It might even amount to more than the usual annual delivery.

In an agreement signed between the U.S. State Department and Mexico in late April , Mexico pledged to deliver 324,000 to 420,000 acre-feet between the signing and October. That’s roughly a year’s worth of water delivered in five months. These deliveries are on top of the 110,000 acre-feet Mexico had delivered since the start of the current water year that started Oct. 25, 2024 and late April 2025.

If realized, the April agreement will bring the total deliveries for the current water year to 434,000 to 530,000 acre-feet, and the total five-year cycle deliveries between 854,000 and 950,000 acre-feet.

“Mexico has delivered 60.8% of the minimum that they said they would, so they’re on target to deliver this minimum of 324,000 acre feet,” Hinojosa says. “By the time this current cycle ends, it still leaves them with a deficit, but nonetheless, it has brought us some water in in recent history.”

Hinojosa praises the current administration for putting pressure on Mexico to achieve the April agreement that actually seems to be happening.

“I’ve been in this business for 38 years, and I’ve never known Mexico to do anything voluntarily before a cycle ends,” he says. “There’s a lot of pressure being put on Mexico, and that’s why they made these targets of delivering water to the U.S. before this current cycle ends.”

Needs for the future

More pressure is going to be needed to prevent this situation from repeating in the future, sources say.

“[Our administration is] going to have to implement something that puts pressure on Mexico that’s not tied to water,” Allen opines. That might mean tariffs or inclusion into the USMCA renegotiation, but whatever it is, it needs to spur Mexico to make good on their delivery requirements.

“Mexico could have fulfilled and caught up to what they owed us in 2022 because their reservoirs were full. They had a little over 3 million acre-feet in storage, and they still were over a year behind at that point in time,” Allen says. “But they didn’t deliver any of that water to the U.S.”

Hinojosa says a mindset change is needed in Mexico.

“We need Mexico to treat us, the United States, as we treat them on the Colorado River,” he says. The same 1944 treaty that dictate’s Mexico’s water deliveries to the U.S. on the Rio Grande also dictates the U.S.’s deliveries of water to Mexico on the Colorado River.

He says the U.S. takes Mexico’s allocation “off the top” of the available water in the Colorado River, then divides the rest among the seven U.S. states that rely on it. But Mexico does not return the favor, he adds.

“That has to change,” Hinojosa says. “Mexico needs to recognize that the treaty calls for a minimum delivery to United States of 350,000 acre-feet per year — that’s a minimum delivery — and they need to set that water aside and deliver that water to United States.”

Galeazzi also advocates for a mindset change here in the U.S. around not only Texas’ water issues with Mexico, but all of the country’s water issues. He describes the U.S. as having put water infrastructure on the back burner, adding that the country has “hamstrung ourselves” with excessive and burdensome regulations.

“We absolutely need to pressure Mexico,” he says. “But, if we want to prevent this from happening, the other thing we have to do is we — as a region, a state and a country — need to get serious and make some very big investments in the infrastructure of water.”

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President Trump Threatens New Round of Tariffs Over the Weekend: Here’s the Latest

Tue, 15 Jul 2025 13:54:06 GMT

U.S. commodity markets were down to start the week in Sunday night trade as the markets digested the latest tariff announcement by President Donald Trump. On Saturday, President Trump threatened to impose 30% tariffs on Mexico and the European Union starting on August 1. The announcement came after a string of new tariff threats last week, as the Trump administration’s deadline for trade deals came due.

On Monday, President Trump continued with tariff talk, saying he would implement “severe tariffs” on Russia unless a peace deal is reached with Ukraine within 50 days.

He provided few details on how they would be implemented but described them as 100% secondary tariffs, meaning they would target Russia’s trading partners in an effort to isolate Moscow in the global economy.

The latest tariff threats weren’t good news for farmers looking to price fertilizer for fall, as StoneX Group says Russia is the United States’ top destination for both urea and UAN imports. StoneX points out Russia’s market chair has “grown substantially in recent years.”

Monday’s news follows a week where many anticipated trade deals. Instead, President Trump made a series of announcements with new tariffs. The new tariffs on Mexico and the European Union, which Trump announced Saturday, capped off a week of sweeping tariff threats.

Earlier in the week, Trump warned of a possible:

50% tariff on all copper imports
50% tariff on all goods from Brazil
35% tariff on Canadian goods
25% tariff on goods from Japan
25% tariff on imports from South Korea
200% tariff on imported pharmaceuticals

The positive side of the announcements is the Trump administration says any products covered under the U.S. Mexico Canada Agreement (UMCA) won’t face the new tariffs.

President Trump also sent letters to both Japan and South Korea last week, saying their goods will be taxed at 25% starting August 1st.

The President posted the two letters he sent to those countries’ leaders on his Truth Social site. In the letter to South Korea, he stated when it comes to Korea’s tariff and non-tariff polices and trade barriers, the relationship between the two countries has been far from reciprocal. He added the 25% tariff was far less than what he says is needed to eliminate a trade deficit disparity.

The letter to Japan added if Japanese companies decide to build or manufacture a product within the U.S., there will be no tariffs. Japanese and U.S. negotiators have been working for several weeks to try and reach a deal.

Lack of Progress Impacts Commodity Prices
The lack of trade announcements last week was just one factor that caused corn prices to tank, according to AgMarket.net’s Matt Bennett. While rain in the upper Corn Belt was also bearish for the markets, little to no movement on trade is also pressuring prices.

“We had no trade announcements, and then we continued to talk about tariffs. The unfortunate reality right now is it appears the administration is playing the long game, trying to get people to come to the table with better trade deals than what we currently have seen. But it certainly isn’t doing any favors for the corn market,” Bennett said on U.S. Farm Report this weekend. “I think something like a big trade agreement certainly could tilt the tide more in the favor of the corn market moving higher. Until you get that, with weather being as good as what it is, there’s nothing there.”

It’s not all bearish, though. Arlan Suderman of StoneX Group says the 50% tariff on Brazil is actually bullish for beef.

“We already have a shortage of protein in America with the cattle herd being shrinking over recent years because of lingering drought in the western half of the country, and supplies are tight. We’re just getting to the point of trying to rebuild those supplies, which holding back heifers, tightens up the supply of meat even more. We’re feeding to record-high carcass weights to try to fill the void. We’re increasing imports to record levels. Brazil is the primary supplier of those imports: 27% of our imports come from Brazil in the first five months of the year, according to the latest data we have available, that’s 666 million pounds. That’s 4% of consumption,” Suderman says.

If you think 4% doesn’t sound like a big deal, Suderman says it is - especially considering meat demand in the U.S. has turned out to be inelastic.

“We’ve been shifting from a starch-based diet more heavily toward protein-based. And as the prices go up, we’re actually increasing demand for beef and the other proteins - but we don’t have the supply of it. I think that could be a real problem going forward for the meat industry and the meat supply. We will have to find somewhere else to get that meat,” Suderman says.

Are Trade Deals Close?

While President Trump initially stated he had reached trade agreements with 200 countries, only a few have been officially announced. These include deals with China, the United Kingdom, and Vietnam, however. Negotiations with other countries are ongoing, with the administration extending the deadline for tariff-related negotiations to August 1.

The European Union says it was working on sealing a trade deal with the U.S. by the end of this month, and the European Commission president says the EU was working closely with the Trump administration to reach a deal.

Mexico Will Send More Water to Texas to Make Up Treaty Shortfall, USDA Says

Tue, 29 Apr 2025 13:48:09 GMT

U.S. Agriculture Secretary Brooke Rollins said on Monday that Mexico would increase its water shipments to Texas to help make up a shortfall under a 1944 treaty that outlines water-sharing between the countries.

U.S. officials and lawmakers have complained that Mexico’s failure to meet its obligations under the treaty is harming Texas farmers.

Mexico has argued that it is under drought conditions that have strained the country’s water resources.

“After weeks of negotiations with Mexican cabinet officials alongside the Deputy Secretary of State Christopher Landau, we secured an agreement to give Texas producers the water they need to thrive. While this is a significant step forward, we welcome Mexico’s continued cooperation to support the future of American agriculture,” Rollins said in a statement.

🚨In President Trump’s first 100 days, we have secured an agreement with Mexico alongside @DeputySecState for an immediate transfer of water from international reservoirs to Texas farmers.

This will meet the immediate needs of American farmers and ranchers, and sets the stage…
— Secretary Brooke Rollins (@SecRollins) April 28, 2025

Earlier this month, Reuters reported that the water issue had emerged as a possible new front in trade negotiations between the two countries.

The water treaty requires Mexico to send 1.75 million acre-feet of water to the U.S. from the Rio Grande every five years.

Mexico will now “transfer water from international reservoirs and increase the U.S. share of the flow in six of Mexico’s Rio Grande tributaries through the end of the current five-year water cycle,” which ends in October, said a USDA statement.

My gratitude to President Trump and Secretary Rollins. They have delivered as promised for our farmers. Mexico will meet its treaty obligations and provide south Texas water as required.
— Sid Miller (@MillerForTexas) April 29, 2025

State Department spokesperson Tammy Bruce in a statement thanked Mexican President Claudia Sheinbaum “for her personal involvement in facilitating cooperation across multiple levels of her government to establish a unified path to addressing this ongoing priority.”

Mexico’s government released its own statement later on Monday saying it would implement “a series of measures aimed at mitigating potential shortfalls in water deliveries” including immediate water transfers as well as during the upcoming rainy season.

“All of these actions have as their fundamental premise the assurance of water supplies for human consumption for the Mexican populations that depend on the waters of the Rio Grande,” the statement said.

Your Next Read:
Tiny Farm Town Defies Feds, Drains Water to Protect Citizens

Can Mexico Afford to Retaliate Against the U.S.?

Inside the U.S.-Mexico water issue

Mon, 14 Apr 2025 13:50:00 GMT

On the evening of April 10, President Donald Trump claimed Mexico was stealing water from Texas farmers in a post on Truth Social.

“Mexico OWES Texas 1.3 million acre-feet of water under the 1944 Water Treaty, but Mexico is unfortunately violating their Treaty obligation,” he wrote, referencing the 1944 Treaty for the Utilization of Waters of the Colorado and Tijuana Rivers , which governs how the two countries share water from cross-border rivers.

“Ted Cruz has been leading the fight to get South Texas the water it is owed, but Sleepy Joe refused to lift a finger to help the Farmers. THAT ENDS NOW! I will make sure Mexico doesn’t violate our Treaties, and doesn’t hurt our Texas Farmers,” Trump continued.

During an interview with Farm Journal’s Chip Flory on AgriTalk the following morning, Agriculture Secretary Brook Rollins said, “Within two hours after that Truth Social [post] going up, the people from Mexico were calling to set up a call with me this morning.”

Indeed, Mexican President Claudia Sheinbaum, during her daily press conference Friday morning , said (as translated from Spanish by Google) “there will be an immediate delivery” of water to Texas farmers.

However, neither Mexico’s late water deliveries nor efforts to deal with the problem are anything new. Both have been going on for decades because there just isn’t enough water.

An old treaty and too little water

According to the 1944 treaty, Mexico and the U.S. must deliver certain volumes of water to one another. The U.S. must deliver 1.5 million-acre feet to Mexico from the Colorado River every year. On the other hand, Mexico must deliver 1.75 million-acre feet to the U.S. from the Rio Grande every five years.

As of April 5 , Mexico had only delivered a cumulative 512,604 acre-feet during the current cycle.

However, when the 81-year-old treaty was written, it vastly overestimated the amount of water available at the time, and severely underestimated the growth in demand that we see now.

“The system doesn’t have enough water for all the users on both sides of the borders,” said Rosario Sanchez, Texas A&M AgriLife Research senior research scientist at the Texas Water Resources Institute and director of the Permanent Forum for Binational Waters. She explained that Mexico usually relies on hurricanes to get enough water in its reservoirs to fulfill the treaty requirements before the five-year cycle’s due date.

This seems to be part of Mexico’s strategy this cycle too. “We hope that the rainy season will give us more water so we can deliver more to the United States,” Sheinbaum said during an April 11 press conference.

An unsustainable pattern

Relying on increasingly uncertain weather patterns to deliver on its water obligations means Mexico often cuts it close to the five-year cycle’s deadline. This brings tensions to a boiling point on both sides.

This same dynamic played out at the end of the last five-year delivery cycle in 2020, during Trump’s first term. The Mexican government promised water deliveries would be made in that final year of the cycle. However, farmers suffering through drought in the state of Chihuahua protested, going so far as to seize the controls of a relevant reservoir in an armed standoff with government officials to prevent the deliveries. Meanwhile, Texas Gov. Greg Abbott called on then Secretary of State Mike Pompeo for action to get water to Texas farmers.

This pattern of late water deliveries from Mexico followed by cross-border tensions was called unsurprising in 2020 by binational water experts. But it is not a sustainable pattern, Sanchez said.

“Not for Texas at least. Texas cannot wait five years for Mexico to get lucky and get a hurricane to fulfill the treaty,” she said. “That is a luxury we are not willing to afford anymore.”

Long-term work on an international problem

In a response on social platform X to Trump’s Truth Social post, Sheinbaum pointed to the work of the International Boundary and Water Commission to identify mutually beneficial solutions. The group is an international body formed in 1889 with a U.S. section and a Mexican section. It is responsible for applying the boundary and water treaties between the two countries.

Among other tasks, the group also signs “minutes” for the 1944 treaty. Minutes function much like amendments and must be agreed to and signed by both governments. One of the more recent minutes, Minute 331 , was signed Nov. 7, 2024, and expands options for Mexico to make water deliveries to the U.S.

“In other words, Mexico can use additional sources of water not contemplated before as possible sources of water to comply with the treaty,” Sanchez said. But the situation is difficult, she added.

“[IBWC is] taking very small steps because international negotiation is hard,” Sanchez said. “Because you’re talking about water, it’s moving water from one place to another, which means taking water from one user to another user. And we don’t have excess of water or additional sources of water.”

BREAKING: CNH Halts Farm Equipment Shipments From North America, Europe To Assess Tariff Situation

Wed, 02 Apr 2025 12:53:24 GMT

In North America, we are stopping shipments from North America plants and European imports effective today. This is a temporary move until we assess the full impact of planned tariffs on pricing. There are no impacts to production and parts shipments continue as planned. We will continue to monitor the situation.CNH Industrial has confirmed online reports it will temporarily pause farm equipment shipments from North American factories as well as from its European counterparts, effective immediately.

Here is CNH Industrial’s statement in full:

“In North America, we are stopping shipments from North America plants and European imports effective today. This is a temporary move until we assess the full impact of planned tariffs on pricing. There are no impacts to production and parts shipments continue as planned. We will continue to monitor the situation.”

CNH Industrial official statement

Quick Analysis

It’s a stunning move the international equipment giant is directly linking to the ongoing global tariff situation. President Donald Trump’s wide-reaching tariff strategy is set to go in motion April 2 (pending any last-minute shifts) and is projected to have sweeping implications for agriculture businesses and economies around the globe.

In addition, this development might represent yet another warning sign the global ag economy is entering a period of recession.

If this feels like a complete surprise to many in the equipment industry that’s because it likely is.

CNH’s latest earnings report call, on Feb. 4, did not contain any mention of the possibility the company would halt shipments. In that call CEO Gerrit Marx did note a 34% reduction in production had already been set in motion in Q4 2024. He attributed the move as a strategy to help lower dealer inventories by over $700 million.

Marx also shared the company is always actively monitoring the tariff situation, a development Case IH head of North America Kurt Coffey previously disclosed to Farm Journal during the National Farm Machinery Show in mid-February , but Marx also mentioned on the Feb. 4 earnings call that at the time it was “too early” to fully assess (tariff) impacts.

Our 2025 update to “ Who Makes What Where ” showed Case IH builds 66% of its row-crop machines throughout North America, while 24% of them are manufactured in Europe.

New Holland itself maintains a fairly balanced manufacturing presence between the two continents, with Europe (30%) and North America (43%) hosting its largest manufacturing footprints.

Your Next Read: Farmers Who Stand Strong With Trump on Tariffs Say Long-Term Gain is Worth Short-Term Pain

92% of Ag Economists Say the U.S. is Already in the Middle of Another Trade War

Fri, 21 Mar 2025 14:47:55 GMT

President Donald Trump hasn’t been shy about using tariffs as a negotiating tool. As he cracks down on fentanyl and illegal border crossings, he’s also pushing to restore what he calls fairness in U.S. trade relationships and countering non-reciprocal trading arrangements.

The reality for agriculture is the U.S. agricultural trade deficit hit a record in 2024 as imports soared, and Trump says he wants to reverse the trend.

According to the Trump administration, when it comes to tariffs and the impact on the overall economy, long-term gain will be worth the short-term pain. However, when it comes to agriculture, ag economists survyed in the March Ag Economists’ Monthly Monitor don’t agree.

Ninety-two percent of economists think Trump’s strategy of using tariffs as a negotiating tool won’t benefit U.S. agriculture in the long run.

Here are some of those economists’ comments from the most recent Farm Journal Ag Economists’ Monthly Monitor survey.

“Food as a weapon doesn’t have a successful track record, see Jimmy Carter and the 1980s,” responded one economist in the anonymous survey. “It’s not a guarantee as it’s like playing Russian roulette; you might ‘win,’ but the risks are huge.”
“Farm Journal readers should learn about the long-term consequences of Smoot-Hawley. It wasn’t just about the economic costs — it was also about the relational damage between trading partners. I have a hard time believing we will rebuild these relationships any time in the foreseeable future,” another economist said.
“It depends on whether tariffs are used as a negotiating tool with the ultimate goal of reducing trade barriers, or whether they instead result in a world with higher barriers. The president’s emphasis on tariffs as a way to raise revenue suggests tariffs and their consequences may persist,” was another economist’s response in the Monthly Monitor.

However, one economist wasn’t as certain, saying, “For it to be beneficial depends on it being short lived and resulting in trade initiatives with market access or purchase commitments. And in the meantime, action is taken quickly related to Trump’s post to offset trade loss with increased domestic use such as removing dated rules that limit ethanol blends, renewing or creating biofuels production incentives, and adding SAF as a mandated fuel.”

Trade War or No Trade War?
What an overwhelming number of agricultural economists do agree on is that the U.S. is in the midst of another trade war. Ninety-two percent of economists say a trade war is already here, while only 8% responded no.

“I don’t think anyone is arguing with the notion that we are in another ‘trade war,’” one economist said. “This one is far bigger and far more consequential than the last one we were in.”

“It seems more like a trade cold war,” another economist responded. “The situation is ever-changing, and it is hard for buyers, markets and producers to anticipate reality and effect. The threat of tariffs is almost as effective as a tariff.”

As agriculture tries to navigate the turbulence and shocks of another trade war, the ultimate question is: Who wins in a trade war? According to Romel Mostafa, professor of business, economics and public policy for the Ivey Business School in London, Ontario, it’s neither the U.S. or Canada.

“If we think about U.S. and Canada, we both lose,” Mostafa says. “The way our markets are integrated, both from the input side as well as the product side, any tariff really increases cost of production for our farmers all the way to food on the table. What then happens, essentially, some of our products are going to be less competitive in major markets than where we compete. Who then benefits? Perhaps Brazil, Russia or other countries.”

Other agricultural economists agree: If you’re looking at the trade war between the U.S. and Canada or the U.S. and China, it’s not the U.S. who wins, it’s ultimately one of the United States’ biggest competitors: Brazil.

The Ag Economists’ Monthly Monitor asked, “In the next 10 years, which country ultimately benefits the most from the current trade turbulence?” Seventy-three percent of economists think it’s Brazil, and 18% said China.

This Trade War Could Be Worse Than the Last time
Of the agricultural economists surveyed, 69% say they don’t think a trade war today would have the same impact it did 2018 through 2020. Instead, most think it will be worse.

“The trade war in 2018/19 also had the African swine fever in China. Because of ASF, they did not need the soybeans anyway. It will be hard to figure out what impacted the U.S. markets/prices more, but the market reaction should not be as great this time,” said one economist in the monthly survey.

Ag Econoimsts’ Monthly Monitor

(Lindsey Pound)

“It would be a bigger impact,” another economist said. “The first round of trade wars in agriculture were largely used as a wedge for negotiation or renegotiation of agreements that provided improved access and growth opportunities for ag trade. This round seems to be championed based on reshaping the entire trading system, a system that U.S. agriculture largely benefited from over time.”

“There appears to be less willingness by the U.S. taxpayer to provide financial assistance to agricultural producers. That is not to say that financial assistance is absent this go around, but I do believe it increases the uncomfortable situation for producers who largely support less government spending,” one of the respondents shared.

However, other economists think it could have a similar impact, saying the same commodities will be impacted.

Even talk of tariffs is enough to move the markets, as some analysts argue the commodity markets have been ignoring fundamentals, instead trading headlines recently.

The Potential Economic Hit to Ag
The American Farm Bureau (AFBF) economists recently took a deeper dive into the possible impact of reciprocal tariffs. AFBF economists say of the top 20 U.S. agricultural products currently being targeted by Canada, for a total of $5.8 billion, commodities such as juice, coffee and chocolate are hardest hit, along with wine, fresh fruit, dairy products, poultry and rice.

Canada’s retaliatory tariffs

(AFBF)

China’s retaliatory tariffs

(AFBF )

When it comes to China, Beijing has specifically targeted 15 products including beef, cotton, grain sorghum, pork, corn and dairy along with fresh fruit. Economists say while it’s too early to measure the full impact of the tariffs on U.S. agriculture, they believe it will certainly decrease demand for U.S. products in Canada and China.

Market Facilitation Program 2.0?
If agriculture is caught in the middle of another trade war, the March Ag Economists’ Monthly Monitor wanted to know if economists think USDA will compensate farmers for their losses again, similar to what the previous Trump administration did with Market Facilitation Program (MFP) payments.

March Ag Economists’ Monthly Monitor

(Lindsey Pound)

Even though Secretary of Agriculture Brooke Rollins has promised to make farmers whole through another trade war, economists are concerned about available funding. Seventy-seven percent of economists think USDA will compensate farmers, but 23% don’t think so.

“Congress might be the limiting factor,” one economist said.

“They will want to do so, but their ability to do so may be limited. The failure to include replenishment of the Commodity Credit Corporation’s borrowing authority in the continuing resolution limits available CCC funds, and other options may also be limited in potential scope,” another respondent shared.

“The political dynamics appear to be similar,” said another economist. “Amounts are however likely to be less, maybe substantially less, due to the general policy initiative to reduce government spending.”

The Secretary of Agriculture has come out and said they will use these tools if it becomes necessary.

Take Our Poll: Do You Agree With President Trump's Use of Tariffs?

Wed, 19 Mar 2025 22:16:06 GMT

Tariff whiplash is consuming the commodity markets — and the possible impact is stirring up quite the debate. At present, President Donald Trump says he’s sticking to his plan to impose additional tariffs on the United States’ top three trading partners starting April 2.

In early February, President Trump announced a 25% additional tariff on imports from Canada and Mexico , a 10% additional tariff on imports from China and a 10% tariff on energy resources from Canada.

Those tariffs were scheduled to go into effect in early March. However, President Trump made the decision to exempt goods from Canada and Mexico under the U.S.-Mexico-Canada Agreement (USCMA) from the 25% tariffs for another month.

What we know today is those exemptions for goods from Canada and Mexico covered under USMCA are scheduled to expire on April 2.

As agriculture waits to see what happens, the commodity markets continue to trade headlines and concerns are mounting about possible retaliatory tariffs. Tariff talk is already impacting input prices for farmers heading into spring.

Share Your Thoughts on Tariffs
In light of the ongoing tariff battle, we have two questions for you:

Do you support President Donald Trump’s use of tariffs as a negotiation strategy?
Do you believe USDA will compensate farmers for losses if agriculture is affected by a trade war, similar to the compensation provided through the Market Facilitation Program?

Click here to share your answers.

NOTE: We appreciate your input. The poll has been closed. Check back on Monday, March 24 for results and analysis.

Can Mexico Afford to Retaliate Against the U.S.?

Wed, 05 Mar 2025 20:28:55 GMT

President Donald Trump followed through on his threats of imposing a 25% tariff on most imports from Canada and Mexico, along with an additional 10% on goods from China. While China and Canada released their list of retaliatory tariffs the same day, Mexico’s president, Claudia Sheinbaum, says they won’t release their list until the weekend.

Sheinbaum said the country will also respond with a 25% tariff on U.S. goods but will announce the products it will target on Sunday.

But can Mexico afford to retaliate? That was one of the questions asked by USDA chief economist Seth Meyer during Commodity Classic this week. The reason is Mexico’s economy is struggling, due to a number of factors, which includes a large informal sector, high budget deficit and unstable infrastructure.

According to the Federal Reserve Bank of Dallas, Mexico’s GDP grew only 0.9% year over year in fourth quarter 2024, after expanding 2.% in 2023 and 4.6% in 2022. Economic growth slowed, mainly due to lower investment, slowing consumption and a contracting energy sector.

(Federal Reserve Bank of Dallas)

The Dallas Fed says lower investment and consumption was the main driver behind the slow growth.

“Investment contributed three percentage points less to GDP growth in 2024 compared with 2023,” the Federal Reserve Bank of Dallas said in a recent report. “The major drop was in nonresidential construction investment, while purchases of imported machinery and equipment also slowed noticeably as the Mexican peso continued to weaken against the dollar. In addition, consumption was impacted by sluggish growth in remittances, high interest rates and flat employment. However, net exports boosted growth in 2024 after dragging it down the previous two years.”

Extremely Reliant Upon Exports
The other issue? Mexico is extremely reliant upon demand from the U.S., exporting $41.9 billion worth of agricultural products to the U.S.

In 2023, Mexico accounted for 16.3% of U.S. agricultural exports and 23.3% of U.S. agricultural imports.

By the numbers:

Mexico is the largest source of horticultural imports to the U.S., supplying 63% of vegetables and 47% of fruit and nuts in 2023.
The top agricultural exports from Mexico to the U.S. in 2024 included beer, tomatoes, tequila, avocados, strawberries, raspberries and peppers.

Mexico is the Biggest Customer of U.S. Ag Exports

The other important piece is Mexico is now the U.S.'s top ag export destination.

According to Krista Swanson, chief economist for National Corn Growers Association (NCGA), Mexico is a huge destination for U.S. corn. More than 40% of U.S. corn exported last year went to Mexico. Not only does that mean the U.S. relies on Mexico, but Mexico is also reliant upon the U.S. do to the strong demand.

“That’s the other key piece here when we think about a Mexico situation, you know, will they retaliate on corn because it’s so important to the consumers in their country,” Swanson told Farm Journal during Commodity Classic this week. “And it’s such a big part of their diets and consumption. It’s a commodity that they consume way more of than what they produce. So they’re going to have to get it from somewhere.”

Bigger Picture
According to USDA’s Economic Research Service , between 1993 (the year before NAFTA’s implementation) and 2023, U.S. agricultural exports to Mexico expanded at a compound annual growth rate (CAGR) of 7%, while agricultural imports from Mexico grew at a rate of 9.7%.

“With the economic recovery in the United States and Mexico that followed the pandemic, U.S. agricultural exports to Mexico increased at a CAGR of 15.7% between 2020 and 2023, and U.S. agricultural imports from Mexico grew at a CAGR of 11.3%,” the USDA report said. “In 2023, however, U.S. agricultural exports to Mexico decreased by 0.3% compared with the previous year, as the prices of major agricultural exports (such as corn and soybeans) declined.”

Trump Sows Confusion on Tariffs for Canada and Mexico, Floats 25% Duty for EU Goods

Wed, 26 Feb 2025 21:41:50 GMT

U.S. President Donald Trump on Wednesday raised hopes for another month-long pause on steep new tariffs on imports from Mexico and Canada, saying they could take effect on April 2, and floated a 25% “reciprocal” tariff on European cars and other goods.

A White House official, however, said Trump’s previous March 4 deadline for the 25% tariffs on Mexican and Canadian goods remained in effect “as of this moment,” pending his review of Mexican and Canadian actions to secure their borders and halt the flow of migrants and the opioid fentanyl into the U.S. Trump sowed confusion during his first cabinet meeting on Wednesday, when he was asked about the timing for the start of the duties for Canada and Mexico and replied that it would be April 2.

“I have to tell you that, you know, on April 2, I was going to do it on April 1,” Trump said. “But I’m a little bit superstitious, I made it April 2, the tariffs go on. Not all ofthem but a lot of them.”

Trump’s comments prompted jumps in the value of the Canadian dollar and Mexican peso versus the greenback.

Canada’s Finance Ministry and Mexico’s Economy Ministry both declined to comment on Trump’s remarks.

U.S. Commerce Secretary Howard Lutnick said the fentanyl-related actions were paused for 30 days but referred to “overall” tariffs on April 2. He did not specify whether the March 4 deadline was still in effect.

“So the big transaction is April 2, but the fentanyl-related things, we’re working hard on the border,”
Lutnick said during the cabinet meeting. “At the end of that 30 days, they have to prove to the president that they’ve satisfied him in that regard. If they have, he’ll give them a pause, or he won’t.”

EU Tariff Rate

Trump has targeted early April for imposing reciprocal tariffs that would match the import duty rates of other countries and offset their other restrictions. His trade advisers consider European countries’ value added taxes to be akin to a tariff.

Trump, asked whether he has decided on a tariff rate for goods from the European Union, replied: “We have made a decision, and we’ll be announcing it very soon, and it’ll be 25%, generally speaking, and that’ll be on cars, and all of the things.”

He said the EU is a “different case” from Canada and takes advantage of the U.S. in different ways.

“They don’t accept our cars. They don’t accept, essentially our farm products,” Trump said, adding that the EU was formed “in order to screw the United States.”

Roberta Metsola, president of the European Parliament, is in Washington and will meet U.S. lawmakers on Wednesday, a spokesman said. She is not slated to meet with any Trump administration officials.

New U.S. Trade Representative Confirmed

Also on Wednesday, the U.S. Senate voted 56-43 to confirm Jamieson Greer as Trump’s new U.S. Trade Representative, putting a veteran of the Republican president’s first-term trade wars fully on the job.

Greer, who served as chief of staff to former USTR Robert Lighthizer, won the support of five Democrats, including both senators from Michigan, the center of the U.S. auto industry.

Trade groups welcomed Greer’s confirmation, lauding his commitment to consulting with industry and standing up for U.S. businesses, farmers and workers. “We share Ambassador Greer’s desire for an active and pragmatic trade policy that creates

U.S. jobs and more resilient supply chains,” said Jake Colvin, president of the National Foreign Trade Council.

Greer told senators during his Senate confirmation hearing that he wanted to quickly renegotiate the U.S.-Mexico-Canada Agreement on trade to ensure China does not use it as a back door to the U.S. market to avoid other tariffs.

“Right out of the gate, I expect that we’ll be taking a second look at the USMCA,” Greer said.

Asked what changes he would like to see in the pact, Greer zeroed in on further tightening automotive content rules.

“I think we should look at the rule of origin for automobiles and aerospace and other things to look and see if we need to have any kind of restriction on content or value added from foreign countries of concern, or non-market economies,” he said, using language that U.S. trade officials often use to describe China.

(Reporting by David Lawder and Andrea Shalal; additional reporting by Bo Erickson and Ryan Jones in Washington, Brendan O’Boyle in Mexico City and Ismail Shakil in Ottawa; Editing by Dan Burns, David Gregorio and Paul Simao)

What to Expect During USDA's Ag Outlook Forum This Week

Wed, 26 Feb 2025 15:41:26 GMT

USDA’s 101st Annual Agricultural Outlook Forum will be held Feb. 27-28 near Washington, DC, with the theme of “Meeting Tomorrow’s Challenges, Today.” The look at corn and soybean acreage under current conditions will be among the key focal points during the event, but it will also be key to see how USDA paints an export outlook with so much uncertainty surrounding tariffs and trade.

Farm Journal Washington correspondent Jim Wiesemeyer says USDA produced its budget-related figures last fall that were part of the agricultural projections publication that was released ahead of the conference.

“It is not clear how much the figures released next week will change relative to the initial budget-related outlooks,” Wiesemeyer says.

We interviewed Seth Meyer, chief economist with USDA, during the Top Producer Summit last week. He provided a preview for the Ag Outlook Forum, saying he will talk about farm income margins for crops and livestock, which are two very different stories. Meyer says one of the challenging parts is trying to forecast the trade picture, even with the uncertainty around tariffs. USDA will also look at the impact of foreign animal diseases on the livestock sector during the Ag Outlook Forum this week.

What’s Meyer’s overall outlook on 2025? It’s a tad more positive than 2024.

“This is a strange statement to appear bullish, but maybe we’ve hit the bottom. Six months ago, things were getting pretty bad, pretty fast. Hopefully we’ve hit a bottom on some of this and seen a little bit of rebound and maybe a little bit better on demand, especially on corn, as we see a little bit of a rebound. So, I’m kind of hopeful that maybe things aren’t going to get a bunch worse on the crop side,” Meyer says.

While he’s more optimistic, Meyer points out here are still a plethora of challenges in the ag economy, especially with tight margins on the crops side.

“For things like cotton, we’ve continued to see price erode,” Meyer says. “We started at an 80 cent forecast. We’re now down to 64.5 cents, and 80 cents wasn’t going to make you a bundle of money at the time either. So I think we go through these periods of crop prices where input prices are slower to correct. And it makes a really disruptive time as that adjustment happens, and we’re in that disruptive time.”

The Difficulty of Forecasting Trade
USDA analysts in the forecasts released later this week are not expected to make any assumptions on the impact of potential tariffs on U.S. agricultural commodities. For the WASDE report, the analysts use the policy actions that are in effect at the time and their outlooks presented next week should follow that track.

“We will produce an outlook which is policy in place,” Meyer says. “So, while there’s been a lot of talk about tariffs, reciprocal tariffs, tariffs on Canada and tariffs on Mexico, right now, we don’t have anything in place. So we’ll do an outlook absent that.”

Meyer says the team at USDA is in the middle of building tools to show the possible impacts of tariffs on trade.

“We’re making sure we have the tools in place to understand what the impact on agriculture is from such actions. So we are prepared internally to do the calculations necessary to support the secretary of agriculture,” Meyer said.

2025 Acreage in Focus
This is USDA’s first glimpse at acreage. Even though it’s not the survey-based estimate, which will be released at the end of March, it’s still the market’s first 2025 acreage data to digest. While Meyer couldn’t reveal any early acreage projections, he acknowledged the trend for more corn acres this year, but says soybeans are also trying to compete for acres.

Meyer wasn’t able to give his acreage estimates, but Dan Basse, founder and president of AgResource Company, says if USDA is aggressive and pencils a 94 million acre number on corn, that could be bearish to the market.

“We’re at 93 million acres at AgResource Company, and I just got back from a conference in Jonesboro in the Delta, and I was just shocked how many Delta farmers want to plant corn and abandon cotton and rice,” Basse told U.S. Farm Report. “We will do a survey again in the middle of March, but our surveys are pointing upward, and I wouldn’t be surprised by 94 million plus at some point.”

Arlan Suderman, chief commodities economist for StoneX Group says his current estimates aren’t quite to 94 million, but close.

“Right now we’re at 93.5 million acres, which is up about 3 million from last year,” Suderman said during the live taping of U.S. Farm Report during the Top Producer Summit. “But I have an alternate scenario I’m using right now, which is 95.5 million acres, which would be 5 million acres, essentially, higher than last year. We’re going to do another survey and collect more data right around March 1 when USDA does, because we’re just hearing enough of the feedback from the seed industry about how big their corn seed sales are versus their soybean seed sales. And so if there’s a bias to it, it’s to the upside right now.”

All Ag Outlook Forum sessions will be streamed on a virtual platform this week.

Mexico’s Sheinbaum Pushes for USMCA Deal as Tariff Deadline Nears

Tue, 25 Feb 2025 20:05:38 GMT

Mexican President Claudia Sheinbaum reaffirmed her commitment to securing a deal with the U.S. to prevent the imposition of 25% tariffs on Mexican exports, set to take effect on March 4. She emphasized Mexico’s dedication to addressing the U.S. fentanyl crisis and maintaining strong trade relations under the USMCA.

Sheinbaum also noted that Mexico is considering additional tariffs on imports from countries without free trade agreements, particularly China. Bloomberg reported this week that if Mexico imposes tariffs on Chinese imports the direct impact will be limited, as Mexico accounts for only 2.4% of China’s total exports.

Economy Minister Marcelo Ebrard remains in Washington for negotiations, as Sheinbaum expressed willingness to speak directly with President Trump if necessary.

Trump said Monday that his planned 25% tariffs on all Mexican and Canadian exports to the U.S. “are going ahead on time, on schedule,” meaning the duties would take effect on March 4 at the conclusion of a one-month suspension.

“This is an abuse that took place for many, many years,” Trump said in justification of the decision to impose tariffs on the United States’ neighbors and North American trade partners. “And I’m not even blaming the other countries that did this, I blame our leadership for allowing it to happen. I mean who can blame them if they made these great deals with the United States, took advantage of the United States on manufacturing, on just about everything,” he said at a joint press conference with French President Emmanuel Macron.

Are Tariff Threats Trump’s Way to Reach a New USMCA Deal?
As the Trump administration decides whether to impose tariffs or not, some argue this negotiation is a precursor to renegotiating USMCA, and this is actually President Trump’s way of renegotiating that agreement.

Is that the case? That’s what Farm Journal asked Gregg Doud who served as the Chief Agricultural Negotiator in the Office of the United States Trade Representative (USTR) during the Trump administration.

“I think you will intentionally never know the answer to that. That’s what I think,” said Doud. “You saw was it at CPAC last week where the Vice President, J.D. Vance, explained the art of President Trump and the way he negotiates. He never takes anything off the table.... it’s all negotiable. That’s the way he views the world. And he’s never going to let you know really where you’re at until the bottom line. He’s a master at it, I think.”

Parts of Mexico Face Growing Drought
One factor that could impact demand for imports is Mexico’s intensifying drought. Mexico’s northwest region is grappling with extreme drought conditions, with parts of Sinaloa, Sonora, Chihuahua, Durango, and Coahuila classified under the highest drought severity level, “exceptional,” according to the National Water Commission (Conagua).

The ongoing dry spell, exacerbated by the La Niña climate phenomenon, has led to widespread crop failures, dwindling reservoir levels, and looming water shortages.

Mexico’s current drought map.

(Conagua)

Water storage in Sinaloa’s dams has hit a 30-year low, with key reservoirs like Adolfo López Mateos and Huites at critically low levels. The drought has severely impacted agriculture, leaving nearly half of Sinaloa’s farmland unplanted.

In response, the government has launched a cloud seeding initiative, allocating 13 billion pesos ($636 million) to stimulate rainfall. Governor Rubén Rocha assured farmers of continued support for fertilizers, seeds, and price stabilization measures but urged cost reductions in agricultural production. With little to no rain expected before July, water rationing and supply cuts are anticipated in the coming months.

China Strikes Back With Tariffs on U.S., North American Trade War On Pause

Tue, 04 Feb 2025 19:45:12 GMT

As of Monday evening, Trump paused tariffs on Canada and Mexico, China tariffs continued to be discussed with China countering with tariffs on the U.S.

President Donald Trump agreed to pause tariffs on Mexican and Canadian goods after negotiations with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau. The duties, originally set to take effect today, Feb. 4, will be postponed for at least 30 days while further discussions take place.

The notices on public review at the Federal Register on tariffs against Canada and Mexico are still shown as being on public inspection with a scheduled publication date on both being Feb. 5. It appears, at least for now, that Treasury Secretary Scott Bessent’s previous comments about Trump’s tariffs have proven correct. He described Trump’s strategy as “escalate to de-escalate,” implying levies are a negotiation tool.

Trump’s trade wants from Canada & Mexico include accelerated USMCA renegotiation.

Tariff suspension with Mexico.

“Tariffs will remain like Schrodinger’s cat, dead and alive at the same time. We believe the endgame is a USMCA renegotiation, to get a USMCA 2.0,” said Carlos Capistran, chief Canada and Mexico economist at Bank of America. “That is when the threat of tariffs really end.

Trump announced via social media that Sheinbaum agreed to deploy 10,000 Mexican soldiers to the U.S.-Mexico border to combat fentanyl trafficking and illegal migration. In exchange, the U.S. will hold off on imposing 25% tariffs on Mexican goods during a one-month negotiation period led by Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and himself. The U.S., in return, will strengthen efforts to stop the flow of weapons, including high-powered rifles, into Mexico, according to Sheinbaum. “For the first time, the government of the United States says we will work together to avoid high-caliber weapons from entering Mexico,” she said, referring to how cartels acquire many of their weapons illegally from the United States. Confirming the deal, Trump said the arrangement is mutually beneficial. Sheinbaum also announced Mexico would establish three joint working groups with the U.S. government. “We already have a working group with the U.S. State Department, where the undersecretary is actively engaged in defending our Mexican brothers and all immigration-related matters,”

Sheinbaum said. “Now, two new groups will be formed — one dedicated to security and another to trade,” she added, emphasizing the importance of the tariff pause. “We now have a month to work and convince everyone that this is the best path forward.”

U.S./Canada tariff freeze.

“The deal Trudeau agreed to yesterday was “virtually the same” as the one Canada’s prime minister had offered weeks ago, wrote Campbell Clark in the Globe and Mail, a Canadian newspaper. “Mr. Trump just loves making those threats and making everyone dance.” And he will “keep on doing it”. “What,” Clark asked, “will Canada do next time?”

Trump and Trudeau agreed to a 30-day tariff suspension while they explore a broader economic deal. Trudeau confirmed Canada’s commitment to bolstering border security with $1.3 billion in funding, the assignment of 10,000 border personnel, the creation of a “Fentanyl Czar” to combat drug-related crime. The border protection plan will use new technology, personnel, helicopters, and enhanced cooperation with American law enforcement agencies. The nation is also investing $200 million in intelligence operations, appointing a fentanyl czar, designating cartels as terrorist organizations, and establishing a partnership with the U.S. Joint Strike Force to fight fentanyl trafficking, organized crime, and money laundering, Trudeau said. Talks with Trudeau also included discussions about regulations that prevent American banks from doing business in the northern nation, according to Trump.

China tariffs under discussion, but China reacts with tariffs on U.S. products.

The 10% U.S. additional tariffs on Chinese goods went into effect today. However, Trump will speak with Chinese leader Xi Jinping in the next few days, White House Press Secretary Karoline Leavitt told reporters. Some speculate discussions could revisit the Phase 1 trade deal from Trump’s first term, which included commitments from China to increase U.S. agricultural imports.

“China will be dealt with,” Trump said. “China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher.”
On Feb 3, China’s U.N. envoy suggested a meeting between Chinese Foreign Minister Wang Yi and U.S. Secretary of State Marco Rubio at an upcoming United Nations Security Council meeting in two weeks, stressing the need for cooperation because “so much is at stake.” China announced strong retaliatory measures against the U.S., imposing punitive tariffs of 10-15% on American products starting Feb. 10. This follows President Trump’s decision to levy 10% additional tariffs on Chinese goods, citing fentanyl controls. Beijing will apply:

15% tariffs on U.S. coal and natural gas
10% on petroleum, agricultural equipment, and high-emission vehicles

China’s Ministry of Finance condemned the U.S. move as a WTO violation that disrupts economic cooperation. Additionally, China introduced export controls on key minerals like tungsten and molybdenum and launched an anti-monopoly probe into Google. It also placed PVH (owner of Calvin Klein) and Illumina on its unreliable entity list, accusing them of discriminatory practices. Of note, despite the U.S. imposing a 10% tariff on Chinese goods and China retaliating with import taxes of up to 15%, the Chinese yuan remained stable, even returning to its previous Friday level. This unexpected resilience suggests that investors still hold hope for a potential last-minute negotiation or compromise, similar to the trade deferrals seen in Canada and Mexico. Trade with China has been falling since the first Trump administration, so the new U.S. tariffs may have only a limited effect on the economy.

Next on Trump’s trade radar

President Donald Trump has renewed his criticism of the European Union, accusing it of exploiting the U.S. on trade, particularly in autos and agriculture. “The European Union has abused the United States for years, and they can’t do that,” he said. In response, European leaders, including French President Emmanuel Macron, signaled their intent to push back. Given that the U.S. and the EU are each other’s largest sources of foreign direct investment, a trade battle between them could have serious economic consequences.

Trump Agrees to Delay Tariffs on Goods From Mexico and Canada for 30 Days

Mon, 03 Feb 2025 16:40:11 GMT

The U.S. has agreed to delay tariffs on goods from Mexico and Canada for one month to allow for more time for negotiations. The agreement from both sides happened on Monday, just hours before the tariffs were set to take effect.

Sostuvimos una buena conversación con el presidente Trump con mucho respeto a nuestra relación y la soberanía; llegamos a una serie de acuerdos:

1.México reforzará la frontera norte con 10 mil elementos de la Guardia Nacional de forma inmediata, para evitar el tráfico de drogas…
— Claudia Sheinbaum Pardo (@Claudiashein) February 3, 2025

President Claudia Sheinbaum said U.S. tariffs against Mexico will be delayed for one month after a conversation with President Donald Trump on Monday. Trump then confirmed the news on Truth social.

Mexico’s president said she had reached several agreements with Trump during the phone call and that both countries will start working on trade and security.

Sheinbaum also said her government agreed to reinforce the border with the U.S. with 10,000 National Guard officers to prevent the trafficking of drugs, particularly fentanyl, from Mexico to the U.S.

Trump had announced plans to hold discussions with the leaders of Canada and Mexico on Monday following his recent declaration of imposing significant tariffs on imports from these countries and China.

“I don’t expect anything very dramatic,” Trump said before he held any of the calls. “We put tariffs on. They owe us a lot of money, and I’m sure they’re going to pay.”

Tariffs Also Delayed At Least One Month on Goods from Canada

Just hours after Mexico’s president said Trump agreed to pause tariffs for at least 30 days, Canadian Prime Minister Justin Trudeau made a similar announcement on X.

I just had a good call with President Trump. Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly…
— Justin Trudeau (@JustinTrudeau) February 3, 2025

In his tweet, Trudeau wrote, “I just had a good call with President Trump.”

Trudeau also committed to appointing a “Fentanyl Czar” and better patrol the border.

Executive Order Over the Weekend Hit Mexico and Canada With Tariffs

Before and after Trump singed the executive order over the weekend, Mexican President Claudia Sheinbaum vowed to counter with retaliatory measures. On Saturday, Sheinbaum announced Mexico would issue its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled.

Sheinbaum said last week she had told her economy minister “to implement Plan B” which she said “includes tariff and non-tariff measures” though it was not clear what those measures were exactly.Sheinbaum said: “We have Plan A, Plan B, Plan C, depending on what the government of the United States decides. It’s very important that Mexicans know that we will always defend the dignity of our people, respect for our sovereignty and a dialogue among equals [with the U.S.], not with subordinates.”

Sheinbaum noted that Mexico has been open to receiving its citizens sent back under Trump’s plan for mass deportation of unauthorized migrants and that it was prepared to take some from other countries, which represented a concession. Deputy Economy Minister for Trade Luis Rosendo Gutierrez is expected to travel to Washington on Monday, according to reports. But he can’t meet with U.S. trade or Commerce Department officials until they’re formally ratified, they said. Instead, he’ll talk to business leaders and associations. Sheinbaum has also pointed to Foreign Minister Juan Ramon de la Fuente as a key interlocutor to US Secretary of State Marco Rubio.

High-level teams from Mexico’s foreign ministry and the State Department are in frequent communication working on security and migration, Mexico is the No. 1 trade partner of the United States, and sends 80% of its exports north. Mexico supplies around half of America’s imported fruit and two-thirds of imported vegetables, in dollar terms — tomatoes, berries, bell peppers, cucumbers. And it’s the largest source of imported beer. Mexico also is the No. 1 provider of medical devices to American hospitals and doctor’s offices, from surgical gloves to scalpels. Mexico emerged last year as the top market for American agricultural exports, totaling $30 billion.

Trump announced general tariffs at his Mar-a-Lago, Florida estate. White House spokesperson Karoline Leavitt said the tariffs would be implemented immediately, but as noted, Canada said tariffs would be implemented on their goods on Tuesday. It typically takes weeks for tariffs to take practical effect.

Key points:

Sector-specific tariffs: New duties will target high-tech and industrial sectors, potentially covering more imports by dollar value than previous tariffs on China. Trump also suggested Friday he’d consider new tariffs on oil and gas, potentially by Feb. 18, though it wasn’t clear what he was referring to.
The duties come on top of existing tariffs on those products. The first Trump administration imposed tariffs on more than $300 billion worth of Chinese goods to respond to an array of unfair trade practices, including intellectual property theft. The Biden administration kept all of them in place and increased rates on $18 billion in goods, including electric vehicles, solar panels, medical equipment, lithium-ion batteries, steel, and aluminum.
A second wave of tariffs could follow a comprehensive review of the trade relationship among the three countries (Canada, Mexico and China) that Trump has ordered completed by April 1.
Exemptions and negotiations: There are ongoing discussions about potential carve-outs for critical industries (like oil and automobiles) amid intense lobbying by U.S. business and labor groups. Some hope for exemptions to mitigate domestic economic risks. Trump told reporters in the Oval Office on Friday that there was nothing Canada, Mexico and China could do to avoid the tariffs before Saturday. “Not right now,” he said, telling reporters that his tariff threat wasn’t a negotiating tool. “It’s a pure economic [decision],” he said. But he did say he was considering a lower tariff on Canadian crude oil — 10% instead of 25% (and that it was he announced on Saturday). At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all U.S. imports from Canada, according to U.S. Census Bureau data. The tariff on China would be for what Trump said was failing to stop the manufacturing of fentanyl precursor chemicals.

Reasons for the tariffs”

Trump on Friday said, “We’ll be announcing the tariffs on Canada and Mexico for a number of reasons. Number one is the people that have poured into our country so horribly and so much,” he said about migrants that have entered the United States via its southern and northern borders. “Number two are the drugs, fentanyl and everything else, that have come into the country and number three are the massive subsidies that we’re giving to Canada and to Mexico in the form of [trade] deficits,” Trump said. “I’ll be putting the tariff of 25% on Canada and separately 25% on Mexico and we will really have to do that because we have very big deficits with those countries. Those tariffs may or may not rise with time,” he said.

During a Friday press conference in the Oval Office, Trump criticized the previous administration’s handling of trade agreements. During his previous term, Trump initiated trade disputes, particularly with China, which significantly impacted U.S. agricultural exports. He stated that China had committed to buying $50 billion a year in farm products, but claimed that former President Joe Biden didn’t enforce this commitment. Trump said, “We’re going to enforce it,” referring to this $50 billion annual purchase agreement with China. His recent statements suggest a continuation of this aggressive stance on trade, framing it as necessary to protect American farmers and correct perceived imbalances left unaddressed by the Biden administration.

Trump’s team was initially considering a grace period between the announcement of the tariffs on Saturday and when they would be imposed, but White House press secretary Karoline Leavitt played down that possibility on Friday. Leavitt said that a Reuters report stating that the tariffs wouldn’t be implemented until March 1 was “false.”

Your Next Read: Trump Officially Signs Three Executive Orders Imposing 25% Tariffs on Canada and Mexico, 10% Tariffs on China

Canada, Mexico Hit Back with Retaliatory Tariffs on U.S. Imports

Mon, 03 Feb 2025 03:34:06 GMT

In response to President Donald Trump’s decision to impose 25% tariffs on Canadian and Mexican goods , Canada announced its own 25% tariffs on $155 billion worth of U.S. imports. Mexican President Claudia Sheinbaum also announced its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled.

Canada Strikes Back
Prime Minister Justin Trudeau stated that the tariffs will roll out in two phases, starting Feb. 4 on $30 bil. targeting American products such as alcohol, produce, household goods, and industrial materials, the same day the American tariffs are set to begin.

The tariffs on the other $125 billion worth of goods will come in 21 days, to allow impacted Canadian companies to adjust their supply chains. Trudeau emphasized that Canada’s response would be “strong but appropriate,” while also considering non-tariff measures like restrictions on critical minerals.

The move has drawn mixed reactions within Canada, with provincial leaders urging strategic countermeasures while ensuring minimal harm to the domestic economy. Meanwhile, the White House justifies the tariffs as a measure against drug trafficking and illegal border crossings, further straining trade relations between the two countries.

American items that Canadians tariffs will be applied to include:

Beer, wine, and bourbon
Fruits and fruit juices including orange juice, as well as vegetables
Perfume, clothing, and shoes
Major consumer products such as household appliances and furniture
Sports equipment
Other materials such as lumber and plastics

The government of Canada says a more detailed list of impacted products will be released soon.

More Tariffs Coming
Foreign Affairs Minister Mélanie Joly said on Jan. 31 that Canada’s retaliatory tariffs would be coming in rounds. “There would be a first round of measures, second round of measures, and a third round of measures,” Joly said at a press conference in Washington. “And we’ll keep ourselves also some leverage.”

When asked if Canada would be shutting off oil exports to the U.S., Trudeau said he will be ensuring Canada’s response will be “equitable” and won’t be damaging to one part of the country more than the others. Energy-rich Alberta has strongly opposed any export tariffs on oil, or for Canada to stop oil exports altogether. Trump said on Jan. 31 that the U.S. tariffs will be lower on Canada’s oil and gas exports, at 10%, while other goods will have a tariff of 25%.

Canada’s trade surplus in merchandise with the U.S. was around $100 billion (US$59 billion) last year, according to a report by TD Bank. If Canadian oil exports to the U.S. are removed from the figure, the “scales tip to America’s favor,” the report says, meaning the United States would have a $60 billion (US$41 billion) trade surplus.

Canada and U.S. Conduct Two-way Trade Worth $1.3T Every Year

According to the Canadian Chamber of Commerce, 2.3 million Canadian jobs are supported by exports to the U.S., and 1.4 million American jobs are supported by exports to Canada. A Bank of Canada analysis says that under a mutual 25% tariffs scenario, Canada’s GDP would take a 2.4% hit.

Mexico Announces Plans for Retaliation
Mexican President Claudia Sheinbaum announced its own retaliatory measures to Trump’s 25% tariffs, but no specifics were unveiled. Sheinbaum said she had told her economy minister “to implement Plan B” which she said “includes tariff and non-tariff measures” though it was not clear what those measures were exactly.

China Reacts
China’s Ministry of Commerce denounced Trump’s tariffs, saying they undermine “the normal economic and trade cooperation” between the U.S. and China.

The ministry said it would challenge the U.S. action at the World Trade Organization (WTO) and take countermeasures “to firmly safeguard its own rights and interests.” The WTO dispute settlement mechanism has been dysfunctional for years amid U.S. opposition to the appointment of new judges.

Your Next Read:
Trump Officially Signs Three Executive Orders Imposing 25% Tariffs on Canada and Mexico, 10% Tariffs on China

Trump Officially Signs Three Executive Orders Imposing 25% Tariffs on Canada and Mexico, 10% Tariffs on China

Sat, 01 Feb 2025 23:01:56 GMT

Big tariffs, big risks, big impacts: When populism and commercial agriculture collide.

President Donald Trump signed three executive orders for tariffs Saturday, the first time a president has used powers granted under the International Emergency Economic Powers Act of 1977. The orders also include retaliation clauses that would ramp up tariffs if the countries respond in kind. Trump cut the levy on imports of Canadian energy to 10%.

Trump officially announced plans to impose new tariffs on imports including computer chips, pharmaceuticals (without specifying which, at what level or when it would take effect), steel, aluminum, copper, oil, and gas by mid-February, expanding his administration’s trade war strategy. He said he would put new taxes on imported oil and gas on Feb. 18 and aimed to do the same for steel and aluminum this month or next month. This move is separate from scheduled tariffs — 25% on Canadian and Mexican goods and 10% on Chinese products set for Saturday, Feb. 1 — and aims to pressure Mexico, Canada, and China to address issues such as border security, drug trafficking, and migration.

Here’s the detailed Fact Sheet from the White House .

Of note: Canadian officials were told by U.S. officials on Saturday that the tariffs would be implemented on their goods on Tuesday, according to people familiar with the situation. Senior figures on Capitol Hill were briefed on the decision.

Trump also hinted at additional tariffs on EU products, citing poor treatment of the United States, though details remain vague. The president said he “absolutely” would impose tariffs on their shipments to the United States. “We are treated so badly: They don’t take our cars, they don’t take our farm products; essentially, they don’t take almost anything. And we have a tremendous deficit with the European Union. So, we’ll be doing something very substantial with the European Union,” he said.

Related News: Canada, Mexico Hit Back with Retaliatory Tariffs on U.S. Imports

Big impact. Such levies targeting imports from America’s top three trading partners — which together accounted for more than 41% of the U.S.’ goods trade in the January-November period of 2024 — potentially affect trillions of dollars in merchandise, like cars and farm products.

Trump said there was nothing the three countries could do now to stop the tariffs.

Trump announced general tariffs at his Mar-a-Lago, Florida estate. White House spokesperson Karoline Leavitt said the tariffs would be implemented immediately, but as noted, Canada said tariffs would be implemented on their goods on Tuesday. It typically takes weeks for tariffs to take practical effect.

Key points:

Sector-specific tariffs: New duties will target high-tech and industrial sectors, potentially covering more imports by dollar value than previous tariffs on China. Trump also suggested Friday he’d consider new tariffs on oil and gas, potentially by Feb. 18, though it wasn’t clear what he was referring to.
The duties come on top of existing tariffs on those products. The first Trump administration imposed tariffs on more than $300 billion worth of Chinese goods to respond to an array of unfair trade practices, including intellectual property theft. The Biden administration kept all of them in place and increased rates on $18 billion in goods, including electric vehicles, solar panels, medical equipment, lithium-ion batteries, steel, and aluminum.
A second wave of tariffs could follow a comprehensive review of the trade relationship among the three countries (Canada, Mexico and China) that Trump has ordered completed by April 1.
Exemptions and negotiations: There are ongoing discussions about potential carve-outs for critical industries (like oil and automobiles) amid intense lobbying by U.S. business and labor groups. Some hope for exemptions to mitigate domestic economic risks. Trump told reporters in the Oval Office on Friday that there was nothing Canada, Mexico and China could do to avoid the tariffs before Saturday. “Not right now,” he said, telling reporters that his tariff threat wasn’t a negotiating tool. “It’s a pure economic [decision],” he said. But he did say he was considering a lower tariff on Canadian crude oil — 10% instead of 25% (and that it was he announced on Saturday). At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all U.S. imports from Canada, according to U.S. Census Bureau data. The tariff on China would be for what Trump said was failing to stop the manufacturing of fentanyl precursor chemicals.

Why a lower tariff on China? Trump’s threats on tariffs are clearly not all bark and no bite, said Wendy Cutler, vice president of the Asia Society Policy Institute in Washington and a former acting deputy U.S. trade representative in the Obama administration. “He’s clearly in an action-oriented mode and wants to use these tariffs to pressure the three countries to address serious U.S. concerns,” Cutler said. “This is the beginning of the story, this is the first salvo in what’s going to be a long four years,” she said. On why the tariff on Chinese goods will be 10% and not 25%, Cutler said this shows that Trump “may be more interested in seeking a trade deal” with Beijing.

Trump said the Biden administration had not enforced trade deals beneficial to U.S. farmers. During a Friday press conference in the Oval Office, Trump criticized the previous administration’s handling of trade agreements. During his previous term, Trump initiated trade disputes, particularly with China, which significantly impacted U.S. agricultural exports. He stated that China had committed to buying $50 billion a year in farm products, but claimed that former President Joe Biden didn’t enforce this commitment. Trump said, “We’re going to enforce it,” referring to this $50 billion annual purchase agreement with China. His recent statements suggest a continuation of this aggressive stance on trade, framing it as necessary to protect American farmers and correct perceived imbalances left unaddressed by the Biden administration.

· Trump’s team was initially considering a grace period between the announcement of the tariffs on Saturday and when they would be imposed, but White House press secretary Karoline Leavitt played down that possibility on Friday. Leavitt said that a Reuters report stating that the tariffs wouldn’t be implemented until March 1 was “false.”

· Reasons for the tariffs. Trump on Friday said, “We’ll be announcing the tariffs on Canada and Mexico for a number of reasons. Number one is the people that have poured into our country so horribly and so much,” he said about migrants that have entered the United States via its southern and northern borders. “Number two are the drugs, fentanyl and everything else, that have come into the country and number three are the massive subsidies that we’re giving to Canada and to Mexico in the form of [trade] deficits,” Trump said. “I’ll be putting the tariff of 25% on Canada and separately 25% on Mexico and we will really have to do that because we have very big deficits with those countries. Those tariffs may or may not rise with time,” he said.

· International reactions: Leaders from Canada, Mexico, and China are preparing responses. The scale of their responses will depend on whether Trump’s actions match his rhetoric, according to officials in Canada and Mexico.

Canada comments. “You will find when we do respond, at least initially, that we will focus on tariffing American goods that actually are sold in significant quantities in Canada, and especially those for which there are readily available alternatives for Canadians,” Natural Resources Minister Jonathan Wilkinson said in an interview cited by Bloomberg on Friday ( link ), hours after Trump reiterated his plan to bring in tariffs on Canada, Mexico and China.
Of note: Canadian officials were told by U.S. officials on Saturday that the tariffs would be implemented on their goods on Tuesday, according to people familiar with the situation.

Canadian Prime Minister Justin Trudeau warned of economic fallout, and Canada even weighed an export tax on oil to undercut Trump’s ability to exclude gasoline price hikes from his tariff fight. Mexican and Canadian officials have expressed frustration that they don’t know what actions would satisfy Trump’s demands, despite weeks of meetings between senior officials. A Canadian contact said Trump “keeps on moving the goal post… If Trump was trying to build anti-American sentiment in a country like Canada (who get mad about little except for hockey), he is executing well.” Trudeau’s government won’t unveil its retaliation list until it sees what the Trump administration moves forward with. After Trump tied tariffs to what he called an “invasion” of migrants and fentanyl, Canadian officials in December unveiled a $900 million border plan, to add helicopters, drones and other surveillance capacity. “Canada’s border is strong and we’re making it stronger,” said Public Safety Minister David McGuinty, speaking to reporters. “When our largest ally raises concerns, we take it seriously.” McGuinty was in Washington Friday to meet with U.S. border czar Tom Homan. Bloomberg reports that Canadian officials come to the discussions armed with documents, charts and even time-lapse videos of certain border crossings. Only 1.5% of migrants apprehended by U.S. Customs and Border Protection in the 2024 fiscal year and 0.2% of fentanyl seized at U.S. borders came from Canada.

Ontario Progressive Conservative Leader Doug Ford spoke in anticipation of Trump’s tariffs on Canadian imports, which are set to be implemented on Saturday, calling them “reckless… I wish I had better news to share but Donald Trump couldn’t have had been more clear. He’s moving forward with these reckless tariffs. He’s chosen to tear up decades of good will that has made life better for workers on both sides of the border, for businesses on both sides of the border, for families on both sides of the border,” Ford said at a campaign event in Brampton.”

Mexican President Claudia Sheinbaum vowed to counter with retaliatory measures. Sheinbaum said: “We have Plan A, Plan B, Plan C, depending on what the government of the United States decides. It’s very important that Mexicans know that we will always defend the dignity of our people, respect for our sovereignty and a dialogue among equals [with the U.S.], not with subordinates.” Sheinbaum noted that Mexico has been open to receiving its citizens sent back under Trump’s plan for mass deportation of unauthorized migrants and that it was prepared to take some from other countries, which represented a concession. Deputy Economy Minister for Trade Luis Rosendo Gutierrez is expected to travel to Washington on Monday, according to reports. But he can’t meet with U.S. trade or Commerce Department officials until they’re formally ratified, they said. Instead, he’ll talk to business leaders and associations. Sheinbaum has also pointed to Foreign Minister Juan Ramon de la Fuente as a key interlocutor to US Secretary of State Marco Rubio. High-level teams from Mexico’s foreign ministry and the State Department are in frequent communication working on security and migration, Mexico is the No. 1 trade partner of the United States, and sends 80% of its exports north. Mexico supplies around half of America’s imported fruit and two-thirds of imported vegetables, in dollar terms — tomatoes, berries, bell peppers, cucumbers. And it’s the largest source of imported beer. Mexico also is the No. 1 provider of medical devices to American hospitals and doctor’s offices, from surgical gloves to scalpels. Mexico emerged last year as the top market for American agricultural exports, totaling $30 billion.

· USMCA impact. While the U.S., Canada and Mexico have a standing free-trade agreement, it isn’t clear that the expected tariff action would immediately violate that pact. The U.S.-Mexico-Canada Agreement (USMCA), like most trade pacts, includes a provision that allows for the imposition of tariffs on national-security grounds.

One of Trump’s tariff goals is to push Canada and Mexico to accelerate a renegotiation of USMCA, now slated for July 2026. President Trump and his supporters believe that imports of cars and steel from Mexico (and China’s involvement in such activity) are weakening U.S. manufacturers. And they say the USMCA, the trade deal Trump signed in 2020 to replace the North American Free Trade Agreement, needs to be updated — or perhaps, scrapped.

Of note: According to economists at S&P Global, of the imports coming into the United States from Canada and Mexico, more than 18% of their value was created in the United States, before being sent to those countries. That’s far more than the proportion for other countries, and a sign of how closely the economies are integrated.

One out of three cars sold in Mexico last year came from China. That means Chinese exports are now meeting Mexican demand for cars, rather than exports from the United States, a blow to the U.S. auto industry.

· Economic impact concerns: “I think there could be some temporary, short-term disruption and people will understand that,” Trump said. Trump said the tariffs “will reinvigorate industry. “The way you bring it back to the country is by putting up a wall. And the wall is a tariff wall,” he said. “The tariffs are going to make us very rich and very strong.” He dismissed concerns that placing steep taxes on many foreign goods would lead to renewed inflation in the United States, where prices are still rising faster than the Federal Reserve’s target. “Tariffs don’t cause inflation. They cause success,” the president said.

Although Trump dismissed worries about inflation and supply chain disruptions, critics warn that broad tariff applications could disrupt trade and lead to higher prices for consumers, especially in border regions heavily reliant on imports from North America. Tariff-related price increases would hit consumers’ wallets at a time when beef prices are near record highs and costs for eggs have climbed after bird flu eliminated millions of egg-laying hens. “Any increase in expenses in the form of a tariff subsequently serves as a ‘food tax’ on consumers for imported products and is not a workable solution,” National Grocers Association spokesman David Cutler said.

Tariffs are paid by American importers and borne by consumers, though offset potentially by price reductions abroad. The burden will fall disproportionally on low-income households who spend more of their income on physical goods relative to higher income households who spend more of their income on services and experiences, which aren’t subject to tariffs.

A new analysis from the Budget Lab of Yale estimated that the proposed tariffs could raise annual costs on households by roughly $1,300. Researchers at the Peterson Institute for International Economics in Washington estimate that a 25 percent tariff on all exports from Mexico and Canada would lower U.S. gross domestic product by about $200 billion for the duration of the second Trump administration. A model gauging the economic impact of Trump’s tariff plan from EY Chief Economist Greg Daco suggests it would reduce U.S. growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” at home. “We have stressed that steep tariff increases against U.S. trading partners could create a stagflationary shock — a negative economic hit combined with an inflationary impulse — while also triggering financial market volatility,” Daco wrote on Saturday.

Facts and figures: 17% of U.S. goods exports go to Canada, 16% go to Mexico and 7% go to China and totaled $763 billion in the first 11 months of 2024.

Of note: For many items, there is roughly a three-month wait until the tariffs impact consumer prices as retailers sell their existing inventory that are not subject tariffs. Getting a firm impact assessment of tariffs is difficult because some exporters will absorb some of the additional costs, and currency changes by some countries will temper the impacts. There will also mean changes to trade flow patterns as buyers seek alternatives sources and sellers look for other importers.

Mexican Economy Minister Marcelo Ebrard said a 25% duty on Mexican goods would have a multibillion-dollar impact on U.S. consumers, affecting millions of households. “Mexico is the main exporter of finished products like automobiles, computers, TV screens and refrigerators,” he said, adding that tariffs would also raise prices of fresh fruit and vegetables, meat and beer. “This impact will be greater in border states and cities that are big consumers of Mexican goods, like California, Texas, Florida and Arizona,” Ebrard said.

A Wall Street Journal opinion item ( link ) was headlined: The Dumbest Trade War in History; Trump will impose 25% tariffs on Canada and Mexico for no good reason.

House Ag Committee Chairman GT Thompson (R-Pa.): Trump’s tariff policy is a crucial tool. Following the imposition of tariffs on Mexico, Canada, and China by the United States, House Ag Chairman GT Thompson issued the following statement: “President Trump’s tariff policy has been an effective tool in leveling the global playing field and ensuring fair trade for American producers. Look no further than Colombia’s about face on accepting repatriated criminal migrants at the mere threat of tariffs. After four years of the Biden/Harris administration’s failure to expand foreign markets, which led to an inflated agricultural trade deficit of $45.5 billion, America’s producers deserve an administration that will fight for them. I look forward to working alongside of President Trump to support our hardworking producers and to make agriculture great again.”

House Ag Committee Ranking Member Angie Craig (D-Minn.) released the following statement ( link ): “No one wins in a trade war. The last time President Trump started a trade war, costs went up for America’s family farmers and consumers. The same will happen today. The cost of imported goods like oil, lumber, avocados, tomatoes, bell peppers, lettuce, broccoli, cucumbers, onions and mushrooms and other fresh food are likely to go up for Americans. At a time when farmers are struggling with high input costs and the American people continue to struggle with the cost of groceries, these tariffs will make it more expensive for farmers to grow food and for consumers to buy it. Additionally, when American farmers face the inevitable retaliatory tariffs from our trading partners, their profits take a hit. This action is especially questionable since President Trump’s previous administration negotiated our last trade agreement – USMCA — with Canada and Mexico.”

Imported goods.

(Bloomberg)

Tariffs coverage. Depending on carve-outs, this round of Trump tariffs could cover more trade in dollar value than his first-term duties on China. Trump’s four tranches of tariffs on Chinese goods in 2018-19 covered imports valued at around $360 billion at the time. New tariffs on Canada and Mexico plus additional tariffs on China would — if all items are subject to the action — cover imports valued at more than $1.3 trillion in 2023. Canada and Mexico combined supplied about 28% of U.S. imports in the first 11 months of 2024, according to Census Bureau data. China accounted for an additional 13.5%.

Price hikes: From Tonka trucks to tequila. While cars and lumber are obvious price hike targets, some unexpected items could see increases, too, according to the Wall Street Journal ( link ):

Cherry tomatoes: Canada and Mexico supply much of the U.S. market.
Tonka trucks: Made exclusively in China, these toys may see a price jump from $29.99 to nearly $40.
Maple syrup: With most commercial production coming from Canada, costs could rise. Canada and the U.S. are the only two countries that produce this at commercial scale, according to Canada’s agriculture department. More than 60% of Canada’s production is exported to the U.S.
Tequila & avocados: Mexico is the top supplier, meaning Super Bowl snacks and drinks could cost more.
Smartphones: Previously spared, they may now be hit with new tariffs.
Sledgehammers: Already taxed at 25%, additional tariffs could push prices even higher.

Securing the U.S. border and dealing with fentanyl are the two major goals of the Trump tariffs. According to Robert Marbut, former homelessness czar for the first Trump administration, fentanyl has killed more Americans in the past five years than all wars combined in the past 100 years. Marbut criticized Canada’s liberal drug policies and Mexico’s unstable regions, where cartels control the drug trade. He said that if the U.S. government is going to tackle fentanyl, it needs to recriminalize drugs domestically, stop China from sending precursors, get the biker gangs in Canada under control, and force Mexico to rein in the cartels. “Fentanyl is a hundred times more powerful than morphine,” he said. “Fentanyl dusts will kill children, fentanyl dusts will kill adults. So just three grains of salt equivalent will kill anybody.”

Tariffs as a revenue raiser. Peter Navarro, a Trump trade adviser, told CNBC on Friday that the tariff effort can replace the revenue of tax cuts. “Tariffs can easily pay for that,” Navarro said. “President Trump wants to move from the world of income taxes and countless IRS agents to the world where tariffs, like in the age of McKinley, will pay for a lot of government that we need to pay for and lower our taxes.” Perspective: The non-partisan Congressional Budget Office has put the cost of extending the 2017 tax cuts — Trump’s top legislative priority — at $4.6 trillion over 10 years. A 25% tariff on the more than $900 billion in annual imports from Canada and Mexico would raise roughly $225 billion annually or $2.3 trillion over 10 years if the tariffs had no impacts on trade, which many economists see as unlikely.

Of note: Navarro thinks corn exports haven’t been entirely benign. Navarro said that NAFTA had kick-started America’s illegal immigration problem, because when the United States began exporting corn to Mexico after the trade pact took effect, that put Mexican agricultural workers out of jobs, sending some of them into the United States. “That’s where that began, our illegal immigration problem,” he said.

Tariffs impact on the U.S. ag sector. American Farm Bureau Federation President Zippy Duvall wrote ( link ) to President Trump Friday urging him to consider U.S. farmers before proceeding with tariff action. “American farmers and ranchers rely heavily on export markets for their business success, especially during these times of economic distress across rural America,” Duvall wrote. A targeted approach to tariffs, with specific exemptions for fuel and fertilizer imports, Duvall added, could “minimize negative repercussions” for farmers. Mexico and Canada account for around a third of all U.S. agriculture exports, buying $30 billion and $29 billion, respectively. China received around $26 billion of ag products last year, Duvall said.

U.S. farmers face rising costs amid proposed Canadian import tariff. The proposed 25% tariff on Canadian imports is expected to have significant repercussions for U.S. farmers, particularly in their access to potash and fertilizers. Key Impacts:

Increased fertilizer costs: U.S. farmers rely on Canada for 85-86% of their potash. The tariff could raise fertilizer prices by $50 to $75 per ton, cutting into profit margins and potentially reducing crop yields.
Short-term supply challenges: With spring planting nearing, farmers may struggle to meet urgent fertilizer needs, as domestic production accounts for less than 10% of U.S. demand. Many farmers have already purchased and applied fertilizer for the 2025 crop season, potentially mitigating immediate impacts, but farmers are unclear as to whether their undelivered fertilizer from Canada will be impacted.
Long-term market shifts: Importers may seek alternative suppliers, and Canadian producers could absorb some costs, but a more significant price increase is expected for the 2026 crop season.
Broader economic consequences: Higher fertilizer costs may lead to rising food prices, strain U.S./Canada agricultural ties, and provoke potential retaliatory trade measures from Canada.

Survey quantifies Canadian farmers’ concern about impact of tariffs, potential trade war. New data from Real Agriculture’s RealAgristudies ( link ) confirms and quantifies the level of concern in Canada’s agriculture sector if the U.S. implements 25% tariffs on Canada on Feb. 1. Farmers who primarily produce livestock are slightly more likely to expect an impact on their farm business than mixed or primarily crop-focused farmers. Interestingly, there wasn’t much difference in how farmers see the potential impact when you compare age, farm size and geography.

Results of a survey of 660 Canadian farmers between Jan. 23 and Jan. 29 showed: 59% of respondents expect the proposed Trump tariffs will negatively impact their business. Only 7% feel there will be no effect. Another 7% don’t know if there will be an impact, while 27% see a possible impact of the Trump tariffs on their farm business.

When it comes to the likelihood of a trade war that significantly decreases Canadian agricultural exports, 29% of respondents feel that scenario is very likely, while 46% say it’s likely; 11% feel a trade war that hurts ag exports is unlikely.

Livestock producers tend to see a trade war as more likely (88%) than mixed (72%) or primarily crop producers (75%).

In terms of how Canada should respond to the tariffs, 34% of respondents said “all of the above” to including export tariffs on key items to the U.S., dollar for dollar retaliation and cutting off certain U.S. imports into Canada; 23% of farmers see an export tariff on key items like potash and energy as the best response as the best singular option.

· Tariff impact support for some industries. Canadian government officials have said that they would consider bailing out businesses and supporting workers who are most affected. Some industries would be swiftly disrupted: Agriculture, automobiles and energy suppliers, pillars of all three economies, would be upended by blanket tariffs.

Tariff aid for U.S. farmers. During her Senate confirmation hearing on Jan. 23, USDA Secretary nominee Brooke Rollins addressed concerns regarding potential tariffs and their impact on U.S. farmers. She acknowledged the possible adverse effects of such tariffs on the agricultural sector and emphasized her preparedness to implement support measures to mitigate these impacts. Rollins stated that she had consulted with former USDA Secretary Sonny Perdue, who oversaw $23 billion in trade aid to farmers during the previous Trump administration, and expressed readiness to execute a similar approach if necessary. She affirmed her commitment to working with the White House to ensure that any negative consequences of tariff implementations on farmers and ranchers are effectively addressed. While acknowledging the potential challenges posed by the proposed tariffs, Rollins conveyed confidence in Trump’s understanding of the agricultural community’s concerns. She described Trump as “the consummate dealmaker” who recognizes the significant support he has received from rural America and the agricultural sector.

U.S. farmers and various trade groups are very apprehensive about not only the potential negative impacts of tariffs on the U.S. ag sector, but what they do to garner new trade agreements, especially as they see China, Brazil, Russia and Ukraine announcing new trade accords or in the process of inking new ones.

Upshot: This latest tariff announcement underscores the escalating tensions in international trade policies and the potential for significant economic consequences if the disputes deepen. The tariff moves will test (1) the limits of Trump’s honeymoon period in his second term in the White House; (2) the U.S. economy and its tentative victory over inflation; (3) American consumers’ appetite to swallow fresh price increases; and (4) the patience of allies. The move against allies Canada and Mexico is a signal that no country is safe from his push to reshape global trade. Big experiment, big impacts, big risks, both economically and politically.

Trump Moves Forward With Plans to Impose 25% Tariffs on Canada and Mexico Starting Saturday

Thu, 30 Jan 2025 22:59:42 GMT

President Donald Trump announced that his administration will impose 25% tariffs on imports from Canada and Mexico starting Feb. 1, citing concerns over trade deficits, illegal immigration, and the fentanyl crisis.

Speaking from the Oval Office, Trump justified the tariffs as a response to what he described as excessive migration, drug trafficking, and unfair trade practices. While he suggested the tariff rate could rise further, he indicated that a decision on whether oil imports would be exempted would come soon.

“Mexico and Canada have never been good to us on trade. They’ve treated us very unfairly on trade,” Trump said, pointing to the huge trade deficits between those countries and the United States. Trump also complained about fentanyl entering the country, especially from Mexico.

Trump also reiterated plans to impose tariffs on China over its alleged role in fentanyl trafficking and suggested additional sectoral tariffs on industries such as pharmaceuticals, semiconductor chips, and steel. The policy shift signals a potentially disruptive turn in North American trade relations, threatening key industries like automotive and energy.

Market Reacts
Market reactions were immediate, with oil prices rising above $73 a barrel, the U.S. dollar strengthening, and the Canadian dollar and Mexican peso dropping. The move has triggered warnings of economic fallout, with both Canada and Mexico vowing to respond with retaliatory measures.

Five Key Questions to Ask

There are five key questions regarding tariff situation:

Will they be announced Sat., Feb. 1?
Will there be a last-minute agreement with Canada and/or Mexico?
What authority will be used to implement any tariffs?
Will there be any exemptions? Ongoing negotiations suggest a possible shift toward targeted measures, particularly affecting steel and aluminum, while oil may receive exemptions.
Will there be an implementation grace period to enable more negotiations?

Tariffs as a Tool to Pressure Canada and Mexico
The proposed tariffs are intended to pressure the two countries into negotiating on migration, drug smuggling, and reforms to the USMCA. The strategy reflects Trump’s preference for using tariffs as a tool to secure compliance with U.S. demands, as seen in a recent, albeit reversed, threat against Colombia.

While both Canada and Mexico have made overtures to address U.S. concerns, Trump’s administration remains unsatisfied. Canadian officials have prepared a list of retaliatory measures and expressed frustration over unclear demands and limited communication. Mexico, meanwhile, has stepped up efforts to curb migration and drug trafficking but faces similar obstacles in negotiating directly with Trump’s yet-to-be-confirmed economic team.

If enacted, the tariffs could disrupt key industries, particularly the ag sector and automotive manufacturing, where supply chains depend on cross-border collaboration. Critics warn of potential economic fallout, including higher consumer prices and a possible recession in Canada.

Despite these risks, Trump’s advisers, including Commerce Secretary nominee Howard Lutnick, advocate for a “tariffs-first” approach to bring trade partners to the table.

If tariffs going into effect on Feb. 1 and the tariff threats materialize, it potentially triggers a new trade war on the continent.

Too Soon?
Some feel Feb. 1 will be too early for any serious tariffs action. Reasons: Trump wants his top trade officials (Commerce Secretary, U.S. Trade Representative, Treasury Secretary, etc.) at their desks. That may take beyond Feb. 1, depending on Senate confirmations.

Also, Trump’s 23 trade executive orders assigned a review of prior trade agreements, trade deficits, practices, etc., with an April 1 deadline. One task involves the White House Office of Management and Budget assessing how foreign government subsidies impact U.S. procurement, with that report due by April 30.

Trump’s Pick for Commerce Secretary Back Tariffs, Slams Canada on Dairy
Howard Lutnick, President Trump’s nominee for Commerce Secretary, strongly defended tariffs and criticized Canada over dairy trade during his Senate confirmation hearing.

Lutnick accused Canada of treating U.S. dairy farmers “horribly” and vowed to secure better trade conditions under the USMCA, which President Trump wants a renegotiation on an accelerated timeline.

Of note: Canadian Pacific Kansas City says it expects shipments in North America to grow this year despite the looming threat of tariffs from the Trump administration.

Lutnick dismissed concerns that tariffs drive inflation, citing China and India’s policies, and expressed support for broad-based tariffs over a selective approach.

Lutnick also linked Trump’s proposed 25% tariffs on Canada and Mexico to border security and fentanyl concerns.

Lutnick said he prefers an “across-the-board” approach to imposing tariffs on foreign goods to put pressure on other countries to lower their own barriers to U.S. exports.

“Our farmers, our ranchers and our fishermen are treated with disrespect” by countries around the world, Lutnick said. “We need the disrespect to end.”

To accomplish that, Lutnick said he favors using across-the-board tariffs on all imports from a particular country, rather than a much more targeted approach.

“I think when you pick one product in Mexico, they’ll pick one product,” Lutnick said. “You know, we pick avocados, they pick white corn, we pick tomatoes, they pick yellow corn. All you’re doing is picking on farmers, which is just not going to happen.”

Trump Vows New Canada, Mexico, China Tariffs That Threaten Global Trade

Tue, 26 Nov 2024 16:45:03 GMT

By Costas Pitas

President-elect Donald Trump on Monday pledged big tariffs on the United States’ three largest trading partners - Canada, Mexico and China - detailing how he will implement campaign promises that could trigger trade wars.

Trump, who takes office on Jan. 20, said he would impose a 25% tariff on imports from Canada and Mexico until they clamped down on drugs, particularly fentanyl, and migrants crossing the border, in a move that would appear to violate a free-trade deal.

Trump separately outlined “an additional 10% tariff, above any additional tariffs” on imports from China. It was not entirely clear what this would mean for China as he has previously pledged to end China’s most-favored-nation trading status and slap tariffs on Chinese imports in excess of 60% - much higher than those imposed during his first term.

The two posts on Truth Social represent some of Trump’s most specific comments on how he will implement his economic agenda since winning the Nov. 5 election on promises to “put America first”.

“On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders,” Trump said.

The U.S. accounted for more than 83% of exports from Mexico in 2023 and 75% of Canadian exports.

The tariffs may also spell trouble for overseas companies like the many Asian auto and electronics manufacturers that use Mexico as a low-cost production gateway for the U.S. market.

Trump’s threatened new tariffs would appear to violate the terms of the U.S.-Mexico-Canada Agreement (USMCA) on trade. The deal which Trump signed into law took effect in 2020 and continued the largely duty-free trade between the three countries.

Canada and the United States at one point imposed sanctions on each others’ products during the rancorous talks that eventually led to USMCA. Trump will have the opportunity to renegotiate the agreement in 2026, when a “sunset” provision will force either a withdrawal or talks on changes to the pact.

After issuing his tariff threat, Trump held a conversation with Canada’s Prime Minister Justin Trudeau in which they discussed trade and border security, a Canadian source familiar with the situation said.

“It was a good discussion and they will stay in touch,” the source said.

Trump could be counting on the threat of tariffs to prompt an early renegotiation of USMCA, said William Reinsch, a former president of the National Foreign Trade Council.

“This strikes me more as a threat than anything else,” Reinsch said. “I guess the idea is if you keep hitting them in the face, eventually they’ll surrender.”

Mexico’s lower house leader Ricardo Monreal, a member of the ruling Morena party, urged “the use of bilateral, institutional mechanisms to combat human, drug and arms trafficking.”

“Escalating trade retaliation would only hurt the people’s pocketbooks and is far from solving underlying problems,” he said in a post on social media platform X.

Trump’s announcement sparked a dollar rally. It rose 1% against the Canadian dollar and 1.6% against the Mexican peso, while share markets in Asia fell, as did European bourses in early trade. S&P 500 futures were little changed.[FRX/][MKTS/GLOB]

China: No One Wins Trade Wars

On China, Trump accused Beijing of not taking strong enough action to stop the flow of illicit drugs into the U.S. from Mexico.

“Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” Trump said.

A Chinese embassy spokesperson in Washington said China believed that China-U.S. economic and trade cooperation was mutually beneficial. “No one will win a trade war or a tariff war,” Liu Pengyu said.

The embassy also cited steps it said China had taken since a 2023 U.S.-China meeting after which Beijing agreed it would stem the export of items related to the production of the opioid fentanyl, a leading cause of drug overdoses in the United States.

“All these prove that the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality,” the spokesperson said.

Chinese foreign ministry said in a statement that China was willing to continue anti-drug cooperation with the U.S. on the basis of “equality, mutual benefit and mutual respect.”

“The U.S. side should cherish China’s goodwill and safeguard the hard-won sound situation of Sino-US drug control cooperation,” the ministry said.

Chinese Vice President Han Zheng, speaking at a supply chain expo in Beijing on Tuesday, said China was ready to work with other countries to build an open world economic system and maintain the stability of global industrial and supply chains.

China’s economy is in a vulnerable position amid a prolonged property downturn, debt risks and weak domestic demand.

In the run-up to the Nov. 5 election, Trump floated plans for blanket tariffs of 10% to 20% on virtually all imports. He also said he would put tariffs as high as 200% on cars coming across the U.S.-Mexico border.

Mexico’s finance ministry said of Trump’s tariff pledge: “Mexico is the United States’ top trade partner, and the USMCA provides a framework of certainty for national and international investors.”

Economists say Trump’s overall tariff plans, likely his most consequential economic policy, would push U.S. import duties back up to 1930s levels, stoke inflation, collapse U.S.-China trade, draw retaliation and drastically reorder supply chains.

(Additional reporting by Kylie Madry, Jasper Ward, David Lawder, Andrea Shalal, David Ljunggren, Brendan O’Boyle, Joe Cash, Ethan Wang and Liz Lee; Editing by Stephen Coates, Edwina Gibbs and Mark Potter)

Mexico is Back with Another Big Buy of U.S. Corn, So, What's Driving the Surge in Sales?

Fri, 01 Nov 2024 18:35:40 GMT

Mexico came in with another big buy of U.S. corn on Friday. USDA reported a sale of 781,322 metric tons of corn for delivery to Mexico, which is 30.76 million bushels. The confirmation follows a slew of sales to Mexico the past couple of weeks, which is also bringing corn prices back to life.

“If we didn’t have it, corn prices would be a lot lower today than where they are,” said Ben Brown, an agricultural economist with the University of Missouri.

The export sale on Friday was mainly for the 2024/2025 marketing year, but 65,532 metric tons were tagged for delivery in the 2025/2026 marketing year.

Mexico is already the top buyer of U.S. corn for 2024/2025. So, what’s behind all these big buys? Arlan Suderman, of StoneX Group, says it’s two-fold: the country needs the grain, and the price is right.

“When we look at the export piece that we’re on right now, it’s stronger than what we normally have at this time of year, and it’s largely been because of Mexico,” said Suderman. “Mexico has been a very aggressive buyer of U.S. corn here, what they perceive to be the harvest lows. That’s not been the trend long-term, but it was the trend last year that followed the drought. They had more drought this last year as well. So, I think because of a tight supply in Mexico, they’re trying to make sure they can get as much coverage as possible near the harvest lows that would suggest weakness down the road.”

Brown agrees that part of the reason Mexico is buying is because of the seasonality of the markets.

“Mexico recognizes that we’re in the middle of harvest. And in theory, these should be some of our cheapest prices of the year. Mexico does not depend in total on river water levels on the Mississippi to get product. We send a lot of corn to Mexico via rail. We don’t have to worry about that logistics issue to get them product. So, they need corn, and we have corn to sell,” Brown said.

Now the question is: can this strong appetite from Mexico continue? Suderman says part of what may be driving the recent purchases is the fact the Black Sea had a short crop this year, as well as Argentina reducing corn acreage by around 20%.

“They may be saying, ‘you know, the upside risk at these low prices is probably greater than the downside risk. So now’s the time to go ahead and get coverage,’” Suderman said.

Suderman think if the longer-term supply concerns persist, largely with the Black Sea and Argentina, Mexico could continue to make big purchases of corn from the U.S.

“If that continues to be the case, then it has legs. And I do expect to see export demand be stronger than normal in the last half of the marketing year, which, by the way, is when it typically is stronger. So I think that’s very supportive of strong exports later in the year and USDA needing to raise their export target,” said Suderman.

Your Next Read: Mexico’s Food and Agriculture Plan: A Return to the 1980s

Meteorologist Talks Emerging Weather Trends And The Ag Supply Chain

Tue, 02 Jul 2024 21:06:42 GMT

Weather is a critical component to the success of any growing season. But Jon Davis, chief meteorologist at Everstream Analytics, says it’s going play an even bigger role from start to finish - eventually changing where specific crops are grown and how they are transported after harvest.

“The climate has absolutely changed things. Agriculturally, there are winners and losers,” Davis says. “For example, the Dakotas have gotten wetter over time. They’re able to support corn and bean development further north up in the prairies. You have a longer growing season and there’s less worry about spring and fall freezes.”

Davis recently joined an episode of the Top Producer podcast to discuss overall weather trends he’s seeing and what the long term impact could be for agriculture.

“There are areas that will be more vulnerable with a higher risk for heat or wetness. Others may actually see an improvement in the overall weather condition for better yields across those areas,” he says.

Beyond the growing season, he shares climate change and the uptick in extreme weather events will have a significant impact on the agriculture supply chain.

“How do extreme weather events affect how we ship and how we move commodities? How does it affect ports, rail lines and trucking overall?” he says. “When moving finished crops with wetter conditions and higher humidity levels, the overall time frame food products can last is shortened up a bit.”

What’s In Front Of Us
As for the 2024 growing season, Davis says he has been tracking a system that could be the key to the overall quality of this year’s crops.

“There’s a ridge of high pressure that has quite a history associated with it. Anywhere it’s gone, it’s produced very hot and extremely dry conditions,” he says. “That ridge is starting to move across the lower 48.”

He’s anticipating unfavorable conditions to strike at the worst possible place and time.

“Places like the prairies will have a lesser impact, but there’s higher risk for corn and soybeans across the Midwest - especially going into July with corn pollinating across those areas.”

Catch up on all episodes of the Top Producer podcast .

New Mexican President: New Challenges or Opportunities for Agriculture?

Mon, 17 Jun 2024 13:39:33 GMT

By Alfredo Gutierrez & Gina Gutierrez: Pachuca, Hidalgo, Mexico

We have to hope for the best and plan for the worst.

That’s a good approach to a lot of challenges—and it’s also how we feel following Mexico’s presidential election on June 2, when voters swept Claudia Sheinbaum into the presidency and gave her ruling Morena party a big legislative majority.

As a pair of Mexican dairy farmers, we have a simple message for President-elect Sheinbaum and her political allies: Please stop the war on agricultural technology.

During her campaign, Sheinbaum promised to support and reinforce many of the harmful policies of outgoing President Andres Manuel Lopez Obrador, nicknamed “AMLO.”

Yet every transition of political power is a chance for a fresh start—and President-elect Sheinbaum may have shown a pragmatic streak immediately after her victory. As the stock market dipped and exchange rates worsened, in a sign that investors are worried about her agenda, she had the Secretary of the IRS confirm he would be staying in her team and gave guarantees that the Central Bank (Treasury) will remain autonomous.

That statement helped the markets stabilize a little, at least for now.

By the time she takes office on October 1, perhaps she will take a new look at agriculture.

She can do a lot better than AMLO.

For the last six years, he promised so much—but for farmers, he was a disaster. He promoted “food sovereignty,” which sounds good in the abstract but in practice meant a rejection of the tools and technologies that have helped farmers in other countries produce bounties.

Rather than embracing the biotech crops that have led to record harvests in the United States and Canada, AMLO promoted the use of only Mexican corn varieties. His administration only recently suspended its threat to ban glyphosate, the world’s best and most popular crop-protection tool.

The result is the opposite of food sovereignty: Mexico imports more food than ever before.

We of course should welcome the chance to trade goods and services around the world. Last year, Mexico surpassed China as the biggest trading partner of the United States, though this was more a result of Chinese decline than Mexican improvement.

Farmers have a lot to gain from international trade. Our climate is ideal for fruits and vegetables that don’t grow well in the United States, Canada, and elsewhere. This is a major competitive advantage. We should make the most of it.

This is also the best kind of food sovereignty: The ability for Mexican farmers to focus on what we do well, using the best tools and methods available and selling what we produce to customers at home and abroad.

We are reminded of the old quip: “Mexican” is another way of saying “Mex-I-Can.”

For us to thrive, though, we need the top technologies, from the biotech crops that have proven their worth for nearly three decades to the gene-edited seeds that are now on the horizon. We also need access to crop-protection products that help us defeat the pests, weeds, and disease that pose a constant threat.

Mexico has an amazing legacy of agricultural innovation. We should lean into it rather than reject it.

This is how we promote the goal of sustainable agriculture: Let’s exploit the technologies that will allow us to grow more food on less land than ever before, in a way that both conserves the environment and helps farmers make a living.

AMLO focused on handouts—direct payments to farmers and others that made little economic sense and felt more like bribes for votes.

Farmers don’t need handouts. We need hand-ups—policies that will reward work and allow us to thrive. President-elect Sheinbaum could start by restoring (or even create from scratch) the programs that were dedicated to productivity, efficiency, and competitiveness. If insurance, financing, and extension were brought back, agriculture would be reactivated on its own.

Perhaps she might also quit the attacks on glyphosate and admit that it is here to stay. She has the power to end the uncertainty that has surrounded this safe product. Politics won’t change a thing, but public policy will.

Mexico and President-elect Sheinbaum face a huge range of daunting problems: Debt, crime, violence, corruption, unemployment, and more. Taken together, they amount to a national crisis.

For farmers and everyone, things may get a lot worse before they improve.

We hope that President-elect Sheinbaum will realize how much agriculture matters, the value created and how helping farmers thrive can help Mexico be better too.

Alfredo Gutierrez is an agronomist and fifth-generation dairy farmer in the central region of Mexico, where he is in charge of animal health and nutrition, equipment, technology and crop production that includes a rotation of corn, triticale, barley, peas and rye grass for forage and green beans, broccoli and cauliflower for fresh markets. Alfredo is a member of the Global Farmer Network www.globalfarmernetwork.org

Georgina “Gina” Gutierrez is a 5^th generation dairy farmer in central Mexico. Gina is a member of the Global Farmer Network and serves as the GFN Community Outreach Agvocate.This column originates at www.globalfarmernetwork.org

Buckle Up: Dispute Panel Called to Action by US in Mexico’s GMO Corn Ban

Thu, 17 Aug 2023 18:48:33 GMT

USDA’s Economic Research Service (ERS) explained this week in its monthly Feed Outlook report that corn exports are reduced 25 million bushels this month to 1.625 billion.

“The weak pace of exports continues into the last quarter of the marketing year, with June exports totaling 150.4 million bushels, down approximately 66 million bushels from June 2022. Corn exports through the first 10 months of the marketing year sit at 1.466 billion bushels,” said ERS in its report.

ERS’s analysis points toward weaker corn exports to close out the marketing year. An announcement from the Office of the U.S. Trade Representative (USTR) on Thursday reveals the U.S.’s GMO corn dispute with Mexico could have something to do with the export decline.

Trade dispute panel called to action in GMO corn ban

USTR shared Thursday it will establish a U.S.-Mexico-Canada Agreement (USMCA) dispute settlement panel as a solution to Mexico’s move to ban GMO corn imports at the beginning of 2023. According to USTR, Mexico’s actions violate the trade agreement.

“Mexico’s approach to biotechnology is not based on science and runs counter to decades’ worth of evidence demonstrating its safety and the rigorous, science-based regulatory review system that ensures it poses no harm to human health and the environment,” says Tom Vilsack, USDA secretary. “Innovations in ag biotechnology play a key role in advancing solutions to our shared global challenges.”

How the USMCA Dispute Process Works

Initially, the U.S. tried to forego a dispute with Mexico through negotiations. Because one-on-one conversations have not remedied the issue, the U.S. began the formal process of a dispute, which includes:

1. Consultations

According to Congress, technical consultations are the initial step in invoking a dispute. USTR took this step in March, which required the U.S. and Mexico to meet within 30 days.

2. Establishing a Dispute Panel

This is the step USTR announced Thursday. At this point, the issue becomes a full-blown trade dispute, and a process will take place to put three to five people on a panel from both Mexico and the U.S.

3. The Panel Process

The elected panel will examine evidence and hear oral testimony from both Mexico and the U.S.

4. Resolving the Dispute

Once the panel delivers a verdict, the party that is found to have violated its obligations under the USMCA will have 45-days to settle the dispute. If a settlement isn’t reached in that window, the “winning” party can impose tariffs on the ag products, such as GMO corn.

What the ag industry has to say about Mexico’s GMO corn ban

Leaders at the National Corn Growers Association (NCGA) said they are in support of USTR’s dispute panel move.

“Mexico’s decree, which runs counter to scientific findings and is in direct violation of USMCA, is negatively impacting American corn growers,” said Tom Haag, NCGA president. “U.S. officials have exhausted every avenue trying to resolve this conflict and are left with no other choice but to turn to a third-party panel in hopes of quickly rectifying this issue.”

Is Mexico Banning GMO Corn to Protect Native Corn Varieties?

Tue, 25 Jul 2023 19:50:00 GMT

Mexico’s move to ban genetically modified corn is a manifestation of its efforts to protect numerous native corn varieties against the global ag industry’s push towards genetically modified organisms (GMOs), according to an article from Ambrook Research . Many activists are celebrating this decision, despite acknowledging the significant pressure coming from trade partners like the U.S. and Canada.

Backstory on GMO Corn in Mexico

The article says that in Mexico, corn is much more than a food crop — it’s a key part of the country’s heritage, culture, and traditions. It has even been listed on UNESCO’s Intangible Heritage of Humanity list. The Mexican government argues glyphosate and GM corn are dangerous to human health, and seeks to introduce alternative, culturally appropriate farming practices and herbicides.

However, there is a broader issue at stake in this debate: Conflicting views of corn’s role and value across different cultures. While the U.S. mainly uses corn for livestock feed and industrial use, corn plays a much more central role in Mexican diets and cultures.

Related story: Food Manufacturers Agree to Use Only non-GMO Corn in Mexico’s Tortillas

Mexico is home to approximately 60 native corn varieties and these varieties are thought to be at risk of contamination or substitution by GM crops, posing a potential threat to Mexico’s cultural heritage and biodiversity alike. With constant pressure from trade partners and the ag sector, fully implementing the ban on GM corn could be a long-term process. Mexico is currently unable to replace all its U.S. GM corn imports by itself.

What’s Next for Mexico Regarding GMO Corn?

Despite these challenges, Mexican advocates remain committed to defending their cultural traditions, health, and ancestral ways of life by protecting the biodiversity of domesticated corn.

Recently, measures have been taken such as the introduction of a 50% tariff on white corn imports and the modification of regulatory standards to ensure tortilla makers only use non-GM white corn.

USTR Comments on USMCA Meetings

Fri, 07 Jul 2023 19:00:00 GMT

During a bilateral meeting on Thursday, U.S. Trade Representative (USTR) Katherine Tai discussed with Mexico’s Secretary of Economy Tatiana Clouthier various issues concerning energy and biotech corn.

According to the Office of the USTR, Tai highlighted concerns about the recent upsurge of steel and aluminum imports from Mexico into the U.S. Further, the regulatory uncertainties confronted by American electronic payment service providers operating in Mexico, and Mexico’s telecommunications spectrum fee method were also issues that were discussed.

Tai said that trade dispute settlement consultations over GMO corn that the U.S. requested in June began with Mexico last week.

Mexico’s Health Ministry on Monday published a draft proposal to modify the Official Mexican Standard (NOM) that governs products made from masa, or corn dough. The proposal is part of an overall federal government effort to stop Mexicans from eating white GMO corn imports, most of which comes from the U.S.

“The use of genetically modified corn as a raw material must be avoided in the making of the products covered by this Mexican Official Standard,” states the document.

Interested parties have 30 days to comment on the proposal, after which the government could publish a modified NOM in its official gazette that bans the use of GM corn in tortillas. The modified NOM would take effect 60 days after publication. The National Chamber of Industrialized Corn (Canami) said that the proposed measure “creates restrictions on international trade and members of the International Trade Organization must be notified.”

Canami also said that the costs of laboratory tests to determine whether corn is GMO or not aren’t being considered. The chamber said that those costs could cause their members to record net losses.

The Health Ministry’s publication came just over a week after the federal government imposed a 50% tariff on white corn imports to limit human consumption of GMO corn. The tariff, which ends access to white corn imports, is scheduled to remain in force until Dec. 31, 2023, after which Mexico intends to ban the importation of GMO corn for human consumption. A ban on GMO corn for animal feed is slated to come in at an unspecified later date, depending on supply.

What’s Next with Mexico and the U.S. in GMO Corn

Despite the contentious nature of these topics, Tai remains hopeful of solutions. She affirmed to reporters that the U.S. has noted some progress in negotiations about energy with Mexico, expressing optimism that the dispute would eventually be resolved.

In a second readout, USTR said Tai discussed the disputes over Mexico’s energy and biotech corn policies with Canadian Trade Minister Mary Ng. Tai also underscored the need for Canada to fully meet its USMCA commitments, including dairy and home shopping, and urged Canada to refrain from imposing a digital services tax.

Of note: The latest Commerce Department report shows the U.S. trade deficit with Mexico rose to a record $14.1 billion in May.

USMCA Up for Debate in Mexico This Week

Thu, 06 Jul 2023 17:16:27 GMT

This week’s talks in Cancun, Mexico between U.S. Trade Representative (USTR) Katherine Tai, Canadian Trade Minister Mary Ng, and Mexican Economy Minister Raquel Buenrostro will allow them to assess the state of the agreement and discuss a series of disputes. Issues include:

• U.S. and Canadian concerns about Mexican energy and biotech policies

• U.S. concerns on Canadian dairy barriers

• Canadian objections to U.S. softwood lumber duties

Another issue is auto rules of origin regulations. Canada and Mexico previously contested the Trump administration’s approach to implementing these rules, arguing the U.S. interpretation was more burdensome than originally negotiated. Even though they won the case in December 2022, the Biden administration has yet to modify the approach, inviting possible retaliation from Canada and Mexico.

Stakeholders plead for answers

U.S. business groups want the Biden administration to formally request a dispute settlement panel to challenge Mexican energy policies that they believe are a violation of the USMCA that went into force three years ago.

The American Petroleum Institute and more than a dozen other business groups raised the energy concern in an 11-page letter to Tai ahead of her attendance today and tomorrow at a meeting of the USMCA Free Trade Commission in Cancún, Mexico.

“We commend the Biden administration’s decision last year to request consultations under the USMCA regarding Mexico’s energy policies,” the groups said in the letter. “However, we are concerned by the Mexican Government’s failure to fix the issues raised by the United States. Mexico continues to hinder the operations of private companies in its energy sector, contrary to its own laws.”

Tai requested consultations with Mexico on the energy issues nearly one year ago on July 20, 2022, and was joined by Canada in the dispute. However, neither country has taken the next step of asking for a panel of trade experts to hear their complaint and decide whether Mexico has violated the three-year-old pact.

Regarding U.S. disputes against Mexico’s biotech corn policies and Canada’s dairy market access barriers, the U.S. has formally requested a dispute settlement panel to issue a decision.

USMCA dispute bottom line

USTR officials said that while the issues on biotechnology, dairy and energy may come up during the discussions, the dispute settlement process was the “primary” venue for such discussions.

“While there are areas of disagreement, of course, some of which may come up in these bilateral meetings, they do not outweigh the productive nature of our trade relationship,” an official said.

The official said those items are not “walled off” from being discussed, the primary format on those topics is the consultations that are ongoing.

Expiration date stamped on the USMCA

The USMCA has an expiration timeline of 16 years, with the opportunity for extension depending on the consensus of Canada, Mexico, and the U.S. The review process starts in year six (2026), where each country can express desire to extend or can raise issues to be addressed. In the latter case, annual reviews will continue until the issues are resolved or the agreement ends in year 16.