Trade. The word was on the lips of nearly every talking head, politician and voter through the presidential election and has remained there now that President Donald Trump has been sworn into office.
It has stayed top-of-mind, especially following Mr. Trump’s withdrawal from the Trans-Pacific Partnership and his talk of renegotiating the North American Free Trade Agreement.
However, I sometimes wonder if trade is talked about so often that its significance has been diminished.
For farmers, the trade picture Mr. Trump is painting is painfully clear: Your access to foreign markets cannot be guaranteed.
Mr. Trump’s latest target, NAFTA, is particularly important for farmers. A three-country accord negotiated by Canada, Mexico, and the United States and ratified in 1994, NAFTA provided for the elimination of most tariffs on products traded among the three countries.
In fact, U.S. agriculture and food exports to Canada and Mexico have more than quadrupled since the agreement was signed, with nearly two in every 10 acres on Illinois farms planted to feed Canada and Mexico.
Commodity crops like corn and soybeans take the crown in the export tally, with Mexico importing more U.S. corn and soybean meal and oil than any other country. Canada does its part, too, and is ninth on the list for U.S. corn, and third on the list for soybean meal.
But it isn’t just commodity crops that travel north and south of the border. Combined, Mexico and Canada account for 40 percent of U.S. pork export volume and 30 percent of U.S. beef export volume. In fact, pork exports to Canada and Mexico add $18.30 to the value of every U.S. hog and $71.65 to the value of every U.S. steer.
NAFTA is a big deal for Illinois farmers, too, considering Canada and Mexico were Illinois’ top two trading partners, accounting for more than $26 billion in exports in 2015.
Those are pretty hefty numbers. But it’s not just farmers who benefit from trade agreements like NAFTA.
In fact, every $1 in exports of grains and grain products generates an additional $3.23 in business sales across the U.S. The positive economic effects of corn exports also benefit wholesale trade, real estate, oil and natural gas production, and the banking and financial industries.
But what about jobs? During the presidential campaign, and while discussing NAFTA after his swearing-in, Mr. Trump alleged the deal had shifted U.S. manufacturing production, and jobs, to Mexico. But is that really the case?
In 2016, Illinois agri-food exports to Canada and Mexico supported 34,785 jobs. In the same year, just the U.S. feed grains exports to Canada and Mexico supported 24,000 jobs.
So far, the talk surrounding NAFTA is just that. While Mr. Trump continues to dissect NAFTA in the press, he has yet to inform Congress of his intent to reopen the agreement.
Unfortunately, that doesn’t necessarily mean no harm has been done. In February, Mexican senator Armando Rios Piter, who leads a congressional committee on foreign relations, introduced a bill forcing Mexico to buy corn from Brazil and Argentina instead of the U.S.
It’s just the first sign of action from Mexico in response to Mr. Trump’s threats against the country. According to Rios Piter, his proposed legislation is a good way to show the Trump administration that “this hostile relationship has consequences.”
As a farmer, trade is absolutely crucial to my business. While every agreement can be improved, the market access and tariff benefits U.S. grain farmers like me have under NAFTA are critical and must be preserved.