In November, President Donald Trump, Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Peña Nieto signed an agreement for the U.S.-Mexico-Canada Trade Agreement (USMCA). Unfortunately, since then Minnesota’s farmers, small-business owners and families have been paying the price for our government’s failure to lower barriers to trade.
First dismissed, then delayed, and now diverted by Washington’s putting politics ahead of the economic well-being of its citizens — passage of a new, modernized trade agreement with our Canadian and Mexican neighbors is overdue. AgriGrowth and its members urge Congress to quickly seal this deal. By ratifying USMCA, Congress will help restore a level of certainty in the markets for U.S. farmers, including here in Minnesota.
The importance of trade with our North American partners cannot be overstated. Canada and Mexico are Minnesota’s largest export markets, worth more than $7 billion annually and supporting more than 200,000 jobs. Moreover, the broad range of Minnesota exports to those markets — from minerals, to medical, to machinery, to meat and other agri-food products — means that every part of the state is harmed by lack of progress on trade.
The USMCA is good news at a time when we need it most. Not only would it help maintain the dramatic increase in U.S. agricultural exports to our neighbors accomplished over the last 25 years, it’s also projected to further increase our exports to these markets.
For Minnesota’s agri-food businesses and farmers, Canada and Mexico purchase nearly $2 billion worth of products a year — triple our ag and food exports to those countries before NAFTA. With more than $7 billion in total ag exports per year in 2016, Minnesota is the fourth-largest ag exporting state in the nation. Minnesota’s agricultural exports support nearly 60,000 jobs and the agri-food industry is the second-largest economic driver in the state.
The USMCA takes us in the right direction. But damage was done to our trading relationships with Mexico and Canada due to threatened withdrawal from NAFTA, criticism of NAFTA partners and the application of Section 232 steel and aluminum tariffs on NAFTA partners. Those tariffs have raised prices on consumer goods from small appliances to washing machines to automobiles and significantly increased costs to agriculture and agribusiness.
Farmers use steel and aluminum every day. Agri-food processing and transportation businesses — upon which many Minnesotans rely for employment and rural economic stability — are also harmed by increased steel and aluminum costs. According to the coalition group Tariffs Hurt the Heartland, Minnesota’s businesses have paid $174 million in additional import tariffs since last year.
U.S. Section 232 tariffs on Canada and Mexico resulted in retaliatory tariffs by those nations on many U.S. products, including important Minnesota goods such as pork and cheese. These retaliatory tariffs further damage agriculture’s bottom line — which is already reeling from low prices, higher input prices, five straight years of declining farm income and, more recently, a particularly harsh winter. According to a study commissioned by Farm Foundation with economists at Purdue University, these retaliatory tariffs will cause U.S. agricultural exports to decline by $1.8 billion a year. And near the end of March, the University of Minnesota’s farm income experts reported an 8% decline in median net income over the prior year and called 2018 likely “the lowest income year for Minnesota farms since the early 1980s.”
As Sen. Chuck Grassley of Iowa recently said: “The agreement for Mexico, Canada and the United States is supposed to be a free-trade agreement. But we don’t have a free-trade agreement with these tariffs in place.”
Now is the right time for President Trump to submit USMCA to Congress and for our elected representatives to pass this critical agreement before farmers and families suffer any more losses — and before election-year politics start ramping up.
Tamara Nelsen is executive director of the Minnesota AgriGrowth Council.