Sec. 232 tariffs removed, commodity groups call for USMCA approval

U.S. agriculture interests took a big breath May 17, with the announcement that Section 232 Tariffs on steel and aluminum imports from Canada and Mexico would be removed. President Donald Trump had imposed tariffs of 25% on steel and 10% on aluminum in March 2018, under a 1962 Cold War-era trade law.

“Today’s announcement is a big win for American agriculture and the economy as a whole,” said U.S. Secretary of Agriculture Sonny Perdue in a statement. “I thank President Trump for negotiating a great deal and for negotiating the removal of these tariffs. Canada and Mexico are two of our top three trading partners, and it is my expectation that they will immediately pull back their retaliatory tariffs against our agricultural products.”

Reuters reported that separate agreements also eliminated Mexican and Canadian retaliatory tariffs many U.S. products, including pork, beef and bourbon.

Farmers are encouraged that these agreements will be a major step in finally approving the U.S.-Mexico-Canada Agreement on Trade, or USMCA.

Wheat

Farmers like U.S. Wheat Chairman Chris Kolstad, a wheat farmer from Ledger, Montana, see USMCA as enabling broader market access for their wheat. In a joint statement with National Association of Wheat Growers, Kolstad said, “we also encourage repealing all the remaining steel and aluminum tariffs and oppose new tariffs on autos under Section 232. New tariffs would encourage our trading partners to retaliate against U.S. farmers and agricultural exports and further weaken international trade rules.”

USMCA retains tariff-free access to imported U.S. wheat for longtime flour milling customers in Mexico. Wheat leaders say that this will rebuild trust in U.S. wheat as a reliable supplier in a market just across our border.

Additionally, the USMCA would enable U.S. wheat varieties that are registered in Canada to be afforded reciprocal treatment, according to the statement.

Pork

U.S. pork producers have been under tremendous financial strain because of these tariffs, according to the National Pork Producers Council.

“Removing the metal tariffs restores zero-tariff trade to U.S. pork’s largest export market and allows NPPC to focus more resources on working toward ratification of the (USMCA), which preserves zero-tariff trade for U.S. pork in North America,” stated NPPC President David Herring, a pork producer from Lillington, N.C.

NPPC states that in 2018, Canada and Mexico purchased more than 40 percent of U.S. pork exports.

Dairy

The National Milk Producers Federation applauds the move, which will see Mexico dropping its retaliatory tariffs against U.S. dairy products, in some cases as high as 25 percent duties on U.S. cheese exports to Mexico.

Tom Vilsack, former U.S. Secretary of Agriculture and now current president and CEO of the U.S. Dairy Export Council, said that if Mexico lifts its tariffs in response it would be a welcome return to normalcy with the country’s No. 1 export market. In 2018, the U.S. sold $1.4 billion in dairy products, accounting for 80 percent of Mexican dairy imports by value.

“America’s struggling dairy farmers are in need of some good news, and today’s announcement certainly helps,” said Jim Mulhern, president and CEO of the National Milk Producers Federation.

The International Dairy Foods Association echoes the appreciation for the removal of tariffs and encourages Congress to move to restore certainty to our dairy producers and processors.

“Just as important, as the U.S. approaches negotiations with Japan, China, the EU and other nations, it is critical that we maintain market access for our dairy industry and move toward a market-principled approach on trade,” said  Michael Dykes, president and CEO IDFA in a statement.  

IDFA reports that trade with Canada and Mexico supports more than 12 million American jobs across all 50 states. Our North American neighbors account for one-third of all U.S. exports, almost $40 billion in value.

Beef

The National Cattlemen’s Beef Association sees this as a move toward ratifying the USMCA, according to Senior Vice President Government Affairs Colin Woodall.

Under USMCA, there would be roughly $1.8 billion in duty-free sales and unrestricted access to Canada and Mexico each year, according to NCBA. The majority, $1.06 billion, would be in U.S. beef exports to Mexico.

Exports to Canada and Mexico account for $70 per head of fed cattle prices, according to NCBA.

American Farm Bureau Federation

According to the American Farm Bureau Federation, the North American Free Trade Agreement, which USMCA replaces, saw ag exports from the U.S. to Canada and Mexico increasing from $8.9 billion in 1993, just prior to implementation, to $39 billion in 2017. USMCA will lock in market opportunities that were previously developed and build on those key trade relationships in several areas, AFBF reports.

Among USMCA’s key components, AFBF highlights:

• New market access for dairy and poultry products in Canada, and the maintenance of the zero-tariff platform on all other ag products into Mexico.

• Canada ends its Class 7 dairy pricing scheme.

• U.S. dairy products gain an additional 3.6 percent of Canada’s dairy market.

• Canada treats wheat imports the same as its domestic wheat for grading and pricing. All three countries agree that grading standards will be non-discriminatory.

• The first free trade agreement that includes measures addressing cooperation, information sharing, and other trade rules related to biotech and gene editing.

• Provisions to enhance science-based trading standards among the three countries.

“Retaliatory tariffs are a drag on American farmers and ranchers at a time when they are suffering more economic difficulty than many can remember,” stated AFBF President Zippy Duvall. Farm Bureau, he continued, believes in fair trade and eliminating more tariffs and other trade barriers is critical to that goal. 

Jennifer M. Latzke can be reached at 620-227-1807 or [email protected].