WASHINGTON — An ad hoc coalition of more than 45 agriculture and business organizations in a Jan. 23 letter to Wilbur Ross, secretary of commerce, and Robert Lighthizer, U.S. trade representative, called for an end to U.S. tariffs on Canadian and Mexican aluminum and steel imports so the United States may realize the fullest possible benefits from the recently negotiated U.S.-Mexico-Canada Agreement (U.S.M.C.A).
The Trump administration on June 1, 2018, raised tariffs on imported steel and aluminum by 25% and 10%, respectively, pointing to national security considerations. Imports of the metals from Canada and Mexico were included in the trade action. Mexico and Canada subsequently retaliated by raising tariffs on several U.S. products, including farm products.
Most U.S. farm and business interests hoped there would be a resolution to the steel and aluminum dispute with Canada and Mexico during the course of the drawn-out and often acrimonious U.S.M.C.A. negotiations. Certainly, this seemed to be the hope of Canadian and Mexican negotiators as well, especially in view of the fact the Trump administration exempted certain other nations from the raised tariffs in exchange for trade concessions.
Leaders of the United States, Canada and Mexico signed the U.S.M.C.A. on Nov. 30, 2018, in Buenos Aires, Argentina. The agreement, if approved by the parliaments of the three nations, would succeed the 25-year-old North American Free Trade Agreement.
But the United States left in place its tariffs on Canadian and Mexican steel and aluminum, and as a result, Canada and Mexico left in place their retaliatory tariffs on certain U.S. products.
The business and agricultural organizations in their letter urged the Trump administration to lift the metals tariffs applying to Canada and Mexico so those nations, in turn, would rescind their raised duties on U.S. goods. The groups said they want the metals dispute resolved soon so they can turn their undivided attention toward generating congressional support for the U.S.M.C.A., which is required by law.
“For many producers, the damage from the reciprocal trade actions in the steel and aluminum dispute far outweighs any benefit that may accrue to them from the U.S.M.C.A,” the groups said. “The continued application of metal tariffs means ongoing economic hardship for U.S. companies that depend on imported steel and aluminum, but that are not exempted from these tariffs. Producers of agricultural and manufactured products that are highly dependent on the Canadian and Mexican markets are also suffering serious financial losses.”
The National Pork Producers Council was a signatory to the Jan. 23 letter. Jim Heimerl, president of the N.P.P.C., said, “We urge the administration to work with the Canadians and Mexicans on a prompt resolution of the metals issue. The metals tariffs are undermining the ability of the private sector to lobby for passage of the U.S.M.C.A. deal.”
Mr. Heimerl pointed out farmers and food companies have been particularly hard hit by the Canadian and Mexican retaliatory tariffs. Mexico’s 20% tariff on U.S. pork has inflicted severe financial harm on America’s pork producers, Mr. Heimerl asserted, pointing to a review by Iowa State University economist Dermot Hayes, Ph.D., that indicated the Mexican tariff costs U.S. pork producers $12 per animal, which translates to industrywide losses of $1.5 billion annually.
Separately on Jan. 23, the Agricultural Economics Department of Purdue University issued a policy brief based on a working paper titled “How U.S. agriculture will fare under the U.S.M.C.A. and retaliatory tariffs,” prepared by department staff in October 2018. The working paper and policy brief cautioned that leaving the steel and aluminum dispute with Mexico and Canada unresolved may more than offset any benefit from increased exports of certain agricultural products to Canada and Mexico under the U.S.M.C.A.
The working paper forecast that should the U.S.M.C.A. succeed NAFTA, ignoring other trade policy considerations, such as the effects of steel and aluminum trade dispute, annual U.S. agricultural exports to Canada and Mexico would be expected to increase $454 million with the gains concentrated in the dairy and poultry products sector.
But the net gain forecast under the U.S.M.C.A. would be transformed into a net loss should the steel and aluminum-related retaliatory tariffs remain in place, the working paper suggested. In this case, the net loss in U.S. agricultural exports would be about $1.8 billion.
The working paper also considered studies on what would likely be the result if the U.S.M.C.A. was not ratified by Congress and President Donald Trump withdrew the United States from NAFTA. One such study assumed tariffs in all three NAFTA countries would revert to most-favored-nation status, and the resulting net loss in U.S. agricultural exports might amount to $9.4 billion.