NAFTA Negotiations Continue As Tariffs Take Their Toll
Agricultural Export Prices Fall 5.3 Percent In July, Sharpest Drop Since 2011
The one-year anniversary of the Trump Administration’s negotiations regarding the North American Free Trade Agreement (NAFTA) has come and gone, and U.S. officials are more hopeful than ever that a deal can soon be reached. Like any agreement more than 20 years old, NAFTA needs modernization, but modernization does not mean throwing the baby out with the bath water. Since NAFTA’s implementation in 1994, its decreased trade barriers have meant a quadrupling of commerce between the U.S., Mexico and Canada totaling $1.3 trillion. The agreement has contributed an additional $127 billion to the U.S. economy annually. And let’s not forget that NAFTA has led the food and agricultural industries to flourish, and these industries now support more than 43 million American jobs.
However, these benefits are under siege due to recent tariffs detrimental to free trade. Earlier this month, New York Federal Reserve Bank economist Mary Amiti wrote in a blog post that “the end result [of tariffs] is likely to be lower imports and lower exports, with little or no improvements in the trade deficit.” Sure enough, the latest statistics released by the U.S. Labor Department underscore that retaliatory tariffs have led to lower imports and exports, particularly for agricultural products. Agricultural export prices in July 2018 fell by 5.3 percent, the sharpest drop since October 2011, with agricultural export prices falling two percent over the past year. U.S. soybean export prices fell an alarming 14.1 percent in the past month and export prices for corn, nuts, wheat and fruits also fell.
NAFTA has demonstrated the benefits of new markets and decreased trade barriers. In contrast, the latest U.S. labor statistics underscore that tariffs threaten the supply chain by leading to lower imports and exports. Free trade works and we urge the Trump Administration to swiftly conclude NAFTA negotiations, and pursue additional trade deals that open new markets and lower costs for American producers and consumers alike.
August 16, 2018 Marks One Year Since NAFTA Negotiations Began. “A year of on-again-off-again negotiations without a clear view of an endgame has demonstrated the pact’s staying power. The survival of Nafta was hardly a given exactly a year ago, when negotiators from the U.S., Canada and Mexico gathered at a hotel in Washington. Their task was to start hammering out a fast update to the 24-year-old pact, which governs $1.2 trillion in trade.” (Andrew Mayeda, Josh Wingrove & Eric Martin, “One Year Later, Nafta Lives On, Resisting Trump’s Trade Wrath,” Bloomberg, 8/16/18)
U.S. Trade Representative Robert Lighthizer Was Hopeful For “A Breakthrough In NAFTA Trade Talks” During A Recent Meeting Of President Trump’s Cabinet. “U.S. Trade Representative Robert Lighthizer on Thursday said he hopes there will be a breakthrough in NAFTA trade talks in the next few days, as the U.S. bilateral discussions were under way with Mexico over the North American Free Trade Agreement. Lighthizer made the remarks at White House meeting of President Trump’s Cabinet.” (Steve Holland & Susan Heavey, “Top U.S. Trade Official Hopes For NAFTA ‘Breakthrough’ In Days,” Reuters, 8/16/18)
The New York Federal Reserve Bank Economist Mary Amiti Has Warned That Tariffs Would Lead To Lower Imports And Exports. “Higher tariffs on imported goods aren’t likely to narrow the U.S. trade deficit because domestic producers are likely to face higher costs for exports, according to a new analysis from the New York Federal Reserve Bank. ‘The end result is likely to be lower imports and lower exports, with little or no improvement in the trade deficit,’ wrote co-author Mary Amiti, an economist at the New York Fed, in a blog post published Monday.” (Nick Timiraos, “Tariffs Could Slow Exports, Not Just Imports, New York Fed Research Warns,” The Wall Street Journal, 8/13/18)
In July, U.S. Agricultural Export Prices Fell By 5.3 Percent With Crops Such As Soybeans Decreasing By As Much As 14.1 Percent. “U.S. agricultural export prices fell by 5.3 percent in July as retaliatory tariffs on American crops kicked into effect, according to Labor Department data released Tuesday. Prices for U.S. crops sold abroad fell last month at the fastest rate since October 2011, led by a 14.1 percent decrease in soybean prices. Export prices for corn, nuts, wheat and fruits also fell in July, likely due to tariffs imposed by nations including China, Canada and Mexico, as well as the European Union.” (Sylvan Lane, “US Crop Export Prices Fall At Steepest Rate Since 2011,” The Hill, 8/14/18)
$1.3 Trillion: American Trade With Canada And Mexico Has Quadrupled To $1.3 Trillion Since NAFTA. (“The Facts On NAFTA: Assessing Two Decades Of Gains In Trade, Growth, & Jobs,” U.S. Chamber Of Commerce, 3/8/17)
$127 Billion: Since Its Implementation, NAFTA Has Annually Contributed An Additional $127 Billion Dollars To The U.S. Economy. (“Top NAFTA Facts,” Bipartisan Policy Center, Accessed 1/13/18)
43 Million Jobs: NAFTA Has Allowed The U.S. Food And Agriculture Industries To Flourish, And Those Industries Now Support More Than 43 Million Jobs Throughout The Country. (Feeding The Economy, Accessed 1/13/18)