President Donald J. Trump railed against the North American Free Trade Agreement as the “worst trade deal ever” during the 2016 election campaign and vowed when he took office he’d immediately begin the process of renegotiating the 23-year-old agreement. The White House web site last week reaffirmed that stance and added, “If our partners (Canada and Mexico) refuse a renegotiation that gives American workers a fair deal, then the president will give notice of the United States’ intent to withdraw from NAFTA.”
What might have been initial discussions over a possible renegotiation of NAFTA rules proved elusive, however, when Mexican President Enrique Peña Nieto on Jan. 26 canceled a meeting with Mr. Trump that was being arranged for last week because of the renewed insistence by the president that Mexico would bear the cost of erecting a border wall between the two nations.
The latest imbroglio between the governments of the United States and Mexico erupted on Jan. 25, when Mr. Trump signed executive orders calling for the construction of the border wall to begin immediately, and asserting Mexico in the end would be required to pay for it.
Sean Spicer, the White House spokesman, then floated the idea that a 20% tariff on Mexican products would provide ample funding to build the wall.
The executive orders were signed even as the Mexican trade and economic ministers were meeting Mr. Trump’s advisers in the White House to arrange Mr. Peña Nieto’s visit. After the executive orders were announced, the ministers were directed by their government to quit the talks.
Mr. Trump suggested in a tweet that if Mexico wasn’t willing to pay for the wall, the upcoming meetings between the heads of state should be canceled. Shortly thereafter, Mr. Peña Nieto officially did just that, saying, “I regret and reject the decision of the United States to build the wall. I have said time and again, Mexico will not pay for any wall.”
Mexican Foreign Minister Luis Videgaray asserted his nation’s stance over the border wall was not a negotiating strategy.
“This goes way beyond any trade issue, investment or other things that we are more than willing to negotiate and talk about and make better,’ Mr. Videgaray said.
Mr. Spicer’s assertion that a 20% tariff on Mexican products may be considered to pay for the border wall in particular raised concerns among many in the food and agriculture industries.
“It is very troubling for world food and agricultural markets for administration spokespersons to bandy about terms like a 20% tax on all imports from Mexico or other countries,” said Tom Stenzel, president and chief executive officer of the United Fresh Produce Association. “The United States both exports and imports a very large amount of foods and agricultural products, and is dependent on fair and open markets. The U.S. has laws and trade agreements in place that do not allow any administration to unilaterally start adding these types of tariffs.”
Mr. Stenzel added, “Consider the impact on American consumers of a 20% hike in the cost of foods such as bananas, mangoes and other products that we simply cannot grow in the United States. Consider also what other countries would do to block U.S. exports in retaliation. As the administration looks to incentivize manufacturing jobs in the United States, we urge President Trump to consider the unique nature of food and not place a new ‘food tax’ on American consumers.”
The office of the U.S. Trade Representative indicated U.S. goods and services trade with Mexico totaled an estimated $583.6 billion in 2015. U.S. exports to Mexico were valued at $267.2 billion, and U.S. imports from Mexico were valued at $316.4 billion. The U.S. goods trade deficit with Mexico was $58 billion in 2015.
Mexico was the United States’ second-largest goods export market in 2015 and was the third-largest supplier of goods to the United States in that year.
U.S. imports of agricultural products from Mexico totaled $21 billion in 2015, making Mexico the second-largest supplier of agricultural products to the United States. Leading imports from Mexico were fresh vegetables ($4.8 billion), fresh fruit ($4.3 billion), wine and beer ($2.7 billion), snack foods ($1.7 billion) and processed fruit and vegetables ($1.4 billion).
U.S. agricultural exports to Mexico in 2015 were valued at $18 billion, making Mexico the United States’ third-largest agricultural export market. Leading export categories were corn ($2.3 billion), soybeans ($1.4 billion), dairy products ($1.3 billion), pork and pork products ($1.3 billion), and beef and beef products ($1.1 billion).