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Mexico And Canada Add To Nations Striking Fear In U.S. Farmers

Jacob Bunge, Heather Haddon & Benjamin Parkin
June 6, 2018
The Wall Street Journal

U.S. farmers, already losing sales to China, are facing new threats to sales in other big overseas markets as trade tensions spread globally.

Mexico this week imposed tariffs on major U.S. exports such as cheese and pork, while Canada and the European Union are considering tariffs on imports of U.S. food and farm goods from corn to orange juice to peanut butter, in response to the U.S. placing tariffs last week on steel and aluminum imports from those countries. In addition, analysts say, China could target other crops and products after Trump administration officials last week outlined potential tariffs on $50 billion worth of Chinese goods.

The rapid-fire exchange of tariffs and trade threats leaves U.S. farmers and agricultural groups fearing tougher sells in their most important overseas markets, with duties adding to the cost of U.S. goods in markets that imported $70 billion worth of U.S. farm products last year, according to the U.S. Department of Agriculture.

American farmers fear a trade dispute will disrupt exports of food commodities.

The more-aggressive U.S. trade policy, industry officials say, also strains relationships built over decades with foreign buyers. Casey Guernsey, a Missouri-based cattleman, said he has fielded questions from a business partner in China over what might come next from Washington on trade.

“It shows a level of angst with our good trade partners,” he said.

Still, the uncertainty over trade talks is affecting business decisions in the Farm Belt and could linger even if the current tariff threats recede.

In Missouri, some ranchers are shrinking herds, fearing tariffs could further pressure sliding cattle prices. That could mean fewer customers for the bulls Mr. Guernsey’s family sells as sires, he said. In the eastern corn belt, some farmers are putting on hold plans to buy new land or build new grain-storage bins.

In 2017, the U.S. exported $138 billion worth of agricultural goods and had a $21.3 billion agricultural trade surplus, according to the USDA, which projects a $21 billion surplus for 2018. The projection was made before Mexico announced its tariffs on U.S. agricultural products.

Many farm groups have urged the Trump administration to tread cautiously in its trade negotiations to avoid disrupting a critical source of business for the U.S. agriculture sector, especially as the industry slogs through the deepest downturn in a generation. Favorable weather has swelled grain stockpiles and made it cheap to expand cattle herds and hog barns, building up supplies and pushing down prices. Changing consumer tastes, such as declining milk consumption, have also caused producers to look abroad.

The Mexican government’s move to place tariffs on imports of cheese from the U.S. stands to derail that progress. On Tuesday, Mexican officials said they would immediately impose tariffs of 10% to 25% on a range of U.S. products. The country also is taking steps to expand imports from other countries, including a tariff-free quota for pork.

Some U.S. agricultural groups say North American Free Trade Agreement negotiations will be thornier with Canada and Mexico joining the tariff battle. Nafta has underpinned a trade boom for U.S. meat, crops, fruit and vegetables. Mexico is the top importer of U.S. apples and is imposing a 20% duty on the fruit.

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