New Trade Agreement a Mixed Bag

Oct. 11, 2018
The NAFTA replacement will preserve and in some cases expand export markets for food, but retaliatory tariffs remain in place.

The Trump administration’s replacement for the North American Free Trade Agreement will preserve, and even expand, American access to its neighbors’ meat and egg consumers—but retaliatory tariffs remain in place.

Meanwhile, JBS, the Brazilian meat producer, is jumping into the Chinese market, motivated at least in part by its opening due to China’s retaliatory tariffs on American products.

The U.S.-Mexico-Canada (USMCA) trade agreement, concluded at the end of September, replaces NAFTA, which Trump had strongly criticized as a presidential candidate. USMCA mostly preserves American access to Canadian markets for farm commodities and processed food

The agreement even goes beyond NAFTA by expanding access in some cases. Tariff-free exports of chickens to Canada will increase by 47,000 metric tons in the first year of the agreement, and will grow to 57,000 tons by the sixth year. Total poultry exports to Canada total about 3 million tons a year.

Expansion of egg exports is even more significant: Tariff-free exports will increase by 10 million dozen, up 15 percent from last year.

However, tariffs imposed by Canada and Mexico in retaliation for an American tariff on imported steel and aluminum remain in place. These include Canadian tariffs on prepared beef products, a Mexican tariff on pork, and a 25% Mexican tariff on cheese. Mexico is the top customer for U.S. cheese exports.

Meanwhile, Brazilian meat giant JBS has announced plans to double the capacity of two of its plants, in large part to meet Chinese demand. The expansion will cost more than $12 million and will expand jobs.

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