The threat of new tariffs placed on Mexico has dairy group leaders worried about the impacts to trade with one of the U.S. dairy industry’s largest partners.
The National Milk Producers Federation (NMPF) and U.S. Dairy Export Council (USDEC) are both voicing their displeasure with the latest round of trade tariffs placed on Mexico by the Trump Administration.
On May 30, the White House announced plans to put new duties on imports from Mexico starting on June 10. The latest tariffs by the Trump Administration have been established to address illegal immigration concerns along the Southern Border. This comes just a few weeks after the dairy industry was celebrating the halt of retaliatory tariffs related to steel and aluminum trade that had impact exports to Canada and Mexico.
Both leadership teams from NMPF pointed out the stance of Senator Chuck Grassley (R-Iowa) as the direction the Trump Administration should take regarding trade, border security and immigration. They are also concerned it could endanger approval of the United States-Mexico-Canada Agreement (USMCA), a trade deal that could bring in an additional $277 million in dairy sales.
“Senator Chuck Grassley is right: Border security issues are border security issues, and trade issues are trade issues,” says Jim Mulhern, president and CEO of NMPF. “New tariffs against Mexico are unlikely to secure the border, but judging from reaction on Capitol Hill, they may very well jeopardize the chances of passing the USMCA, a key White House priority and one that’s crucial for future agricultural prosperity.”
“Mexico is a trusted trade partner and ally and the dairy industry was looking forward to the resumption of a robust trade relationship with Mexico,” adds Tom Vilsack, president and CEO of USDEC. “As Senator Grassley has indicated, this action may threaten forward movement on the USMCA ratification effort, which is a top priority for the dairy industry and the Trump Administration.”
Tariffs have been a concern for dairy producers with all trade partners in the past year. An estimated $2.3 billion in revenue is calculated to have been lost during the first three months of 2019 because of tariffs that lowered milk prices, according to NMPF.
Mexico is one of the U.S. dairy industry’s largest trade partners. During the first quarter of this year, Mexico accounted for more than 25% of U.S. dairy exports. The U.S. makes up 73% of the import market to Mexico and shipped $1.4 billion worth of dairy products during the first three months of 2019.
“For dairy farmers, renewed turmoil with Mexico also threatens gains made earlier this month, when Mexico dropped retaliatory tariffs against U.S. cheese. Re-escalating trade tensions only harms farmers further, just when they were seeing glimmers of hope,” Mulhern says.
Listen to the following podcast to hear what Mexico can do to possibly meet the tariff deadline set by the Trump Administration: