EXPORT GOLD

To understand how Trump’s distaste for NAFTA could hurt US industry, look at American corn

Obsession
"America First"
Obsession
"America First"

American corn farmers are getting a taste of what a less-friendly relationship with Mexico could entail.

As US president Donald Trump has railed against the North American Free Trade Agreement (NAFTA), Mexico has been scaling back corn purchases. American corn exports to Mexico dropped 9% in the first five months of 2017 compared with the same period last year, according to the latest data from the US Census Bureau. So Mexico, which used to be the world’s biggest importer of American corn, has been overtaken by Japan.

NAFTA has been a boon for the US agricultural sector. Commodity exports in general to Mexico have grown by more than 50% since 2002, according to the Census.

US farmers are worried about what could happen to that business if Trump further alienates its southern NAFTA partner. Tom Sleight, chief executive of the trade group US Grains Council, told the New York Times that ties with customers in Mexico have been fraying in the Trump era: “Usually it’s been a very symbiotic relationship, but recently it’s gotten a little more difficult. Mexicans are saying, ‘Why are you doing this to us? We’ve been your best customers.’”

There are signs that Mexico might use its imports of corn and other commodities as leverage during the renegotiation of the treaty. (Last year, Mexico bought $2.6 billion worth of American corn.)

Mexican officials have responded to Trump’s rhetoric by very publicly looking for new suppliers. Earlier this year, they made a sourcing trip to South America. “This way, amid the changes in the US’s public policies, Mexico is in a strong position to negotiate,” Mexico’s agriculture department said in a statement (link in Spanish) ahead of the trip.

Their efforts have already resulted in deals (link in Spanish) with Brazilian corn producers that could quickly increase imports from that country.

Still, it would take a while to knock down the US as top supplier. From January to April, Brazil accounted for less than 1% of Mexico’s corn imports. The US made up nearly all the rest, according to Mexico’s Economics Ministry.

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