US president Donald Trump’s threats to upend existing free-trade agreements so far amount to bluster, but that’s not stopping Mexico from taking steps to protect itself.
In a move to safeguard his country’s national interests, Mexican deputy economy minister Juan Carlos Baker confirmed to the Financial Times (paywall) over the weekend that his country is in talks with Argentina and Brazil to create duty-free relationships for corn imports.
Mexico currently gets about 98% of its corn from the US. If those arrangements materialize, it will hit US farmers—the very people that Trump often says he’s protecting from bad trade deals.
US corn shipments to Mexico account for more than $2.5 billion in business for American farmers, who’ve enjoyed a lucrative, duty-free relationship with their southern neighbors since the adoption of the North American Free Trade Agreement (NAFTA) in 1994.
The future of that cross-border relationship now hangs in the balance. Trump ascended into public office on promises that included renegotiating NAFTA, which he has described as “the worst trade deal maybe ever signed, anywhere.” Whether Trump actually gets around to addressing NAFTA in a substantive way remains to be seen.
Brazil is America’s biggest competitor in the global corn market. In 2016, it produced 91.5 million tons of the grain, exporting a third of it. Argentina produced 37.5 million tons and exported more than two-thirds of its crop. Still, some agricultural groups say it would be very difficult—if not impossible—for Mexico to turn entirely to other countries for its corn.
The US exports more than 100 million metric tons of grain each year, nearly half of which is corn. “We’re trying not to respond too heartily to something that is probably largely rhetoric at this point,” says Mark Lambert, a spokesman with the US Corn Growers Association. “If this occurs, yeah, it will be a big concern for us.”
Both the Corn Growers Association and the US Grains Council have spoken out against the administration’s desire to tinker with NAFTA, putting pressure on Trump to back off, lest he hurt many of the rural-dwelling farmers who showed up in droves on election day to usher him into office.
“Over the past two decades, US agricultural exports to Canada and Mexico tripled and quintupled, respectively,” their statements read. “One in every 10 acres on American farms is planted to feed hungry Canadian and Mexicans.”
The Mexican economic minister told the FT that talks with Brazil are “pretty far advanced,” with Argentina “a few steps behind,” adding that he has a scheduled trip to Argentina later in the next several months.