Farm groups applaud lifting of tariffs

News that President Donald Trump removed metals tariffs on Canada and Mexico, has drawn praise from farm organizations across the country. As part of Friday's arrangement, the Canadians and Mexicans agreed to scrap retaliatory tariffs they had imposed on U.S. goods, including cheese.

“The lifting of steel and aluminum tariffs on Mexican and Canadian imports and the elimination of retaliatory tariffs on U.S. agricultural products by Mexico and Canada is welcome news," said American Farm Bureau Federation President Zippy Duvall. “Retaliatory tariffs are a drag on American farmers and ranchers at a time when they are suffering more economic difficulty than many can remember. Elimination of these tariffs should help pave the way for approval of the USMCA by Congress. Likewise, keeping an eye on Friday’s deal should address concerns about dumping and unfair subsidies."

With this milestone reached, Duvall urged negotiators to continue their work toward re-opening markets with the European Union, China and Japan.

"The Farm Bureau believes in fair trade. Eliminating more tariffs and other trade barriers is critical to achieving that goal,” Duvall said.

Remove barrier

Wisconsin Farm Bureau President Jim Holte says he is hopeful that the recent action will eliminate a major barrier of getting the United States-Mexico-Canada Agreement passed through Congress.

"Wisconsin’s agricultural economy greatly benefits from trade and the relationships with Canada and Mexico," he said. "Having the retaliatory tariffs eliminated on our products, especially cheeses, is a step in the right direction but passing the USMCA is what is needed next."

FarmFirst Dairy Cooperative President John Rettler said his organization was eager to see Mexico respond by dropping their tariffs on U.S. dairy products and restore trade with its number one export market.

"More than 20 years have been dedicated to increasing U.S. dairy export volumes to Mexico, building a strong trade relationship but also a valuable channel of safe, quality food products for Mexicans and their families to enjoy," Rettler said.

Rettler pointed out that for every $1 of U.S. dairy exports to Mexico, $2.50 is generated as economic activity in the U.S., according to Informa Economics.

"This is a step in the right direction, especially as Congress considers USMCA. Dairy farmers are eager to see additional progress made on these trade agreements, including the passage of USMCA," Rettler said. "Now that the tariffs are no longer in place, Congress can remove that political barrier and move forward with approving this trade agreement."

However, there is more work to be done outside of this trade agreement, especially as trade talks continue with countries like China, Rettler said.

Good news for farmers, processors

Edge Dairy Farmer Cooperative, one of the largest dairy co-ops in the country, says the recent rollback of tariffs between the U.S. neighbors is good news for Wisconsin dairy farmers and processors.

"Ending these tariffs will remove a roadblock to free and fair trade with two important partners, particularly Mexico, which is by far the biggest buyer of our dairy products," said Brody Stapel, president of Edge and a dairy farmer from eastern Wisconsin.

Retaliatory tariffs hit farmers at a time when the industry was already struggling with low milk prices and a lack of work force.  Stapel says he hopes the recent development signals that the proposed USMCA trade pact between the countries will get the full support of Congress.

"That deal is critical to the long-term success of the U.S. dairy community, so we cannot stress enough the importance of our lawmakers in both parties getting behind USMCA as soon as possible," he said. "Exports play a key role in the future milk price. Under today’s depressed milk prices and higher production costs, our farmers are feeling the strain. Lifting the tariffs will help ease the long-term pain.”

Enough is enough

American Dairy Coalition officials say it's time House Speaker Nancy Pelosi to schedule a vote on USMCA.

"Each day that this important agreement is not in place leads to more uncertainty in the dairy industry as we lose access to off-shore markets," said American Dairy Coalition Board President, Walt Moore. “The ongoing farm crisis transcends partisanship. It's time for America’s farmers to contact their Congressional representatives — regardless of political affiliation — and let them know that enough is enough. It’s time to move forward,”

Farmers need a path to stability.  We need the ratification of the USMCA immediately, Moore added.

More work to do

David Herring, a pork producer from Lillington, N.C., and president of the National Pork Producers Council said Mexico's 20% retaliatory tariff on U.S. pork has cost pork producers $12 per animal, or $1.5 billion on an annualized, industry-wide basis.

"Last year, Canada and Mexico took over 40% of the pork that was exported from the United States," Herring said, adding that U.S. pork exports to Mexico and Canada support 16,000 U.S. jobs. 

Herring hopes the focus will turn to the completion of a trade deal with Japan.

"U.S. pork is losing market in its largest value market to international competitors that have recently implemented new trade agreements with Japan," he said.

According to Dr. Dermot Hayes, an economist at Iowa State University, U.S. pork will see exports to Japan grow from $1.6 billion in 2018 to more than $2.2 billion over the next 15 years if the U.S. quickly gains access on par with international competitors.

Hayes reports that U.S. pork shipments to Japan will drop to $349 million if a trade deal on these terms is not quickly reached with Japan.