- A coalition of 133 companies and trade organizations representing more than 15 million jobs in the U.S. food and agricultural industry sent a letter to President Trump on Monday asking to modernize the North American Free Trade Agreement, but preserve the significant gains the industry has made. Major signatories to the letter include Cargill, Smithfield, Tyson, and many trade groups representing dairy farmers, pork producers, corn growers and more.
- The letter states U.S. food and agricultural exports have produced a consistent trade surplus over the last half century. In 2015, there were $130 billion worth of exports, which created $423 billion in domestic economic activity. During the last 25 years, the letter states, the amount of U.S. food exported worldwide has steadily risen in both value and volume.
- While there are some tariffs that stand in the way of U.S. exports, the letter states that NAFTA has brought a windfall to U.S. farmers and food producers. Since NAFTA went into effect, U.S. food and agriculture exports to Mexico and Canada have more than quadrupled from $8.9 billion in 1993 to $38.6 billion in 2015.
Espousing a strict "America first" policy in his campaign and inaugural address, President Trump has long promised to renegotiate key trade deals. Throughout his campaign, he repeatedly called NAFTA "a disaster," and many expect it to be one of his first targets of his presidency. As of Wednesday morning, no information has been released about reopening talks, but leaders of Canada and Mexico are reportedly ready for discussion.
At a White House meeting with business leaders on Monday, Trump reiterated that he wants "to bring manufacturing back to our country. It’s one of the reasons I’m sitting here instead of somebody else sitting here.”
Scrapping a key trade deal like NAFTA could put a damper on the agriculture industry, which relies on exports to other countries. Any policy that heavily favors domestic production may end up putting stiff tariffs on imports, which could result in other countries employing their own stiff tariffs on U.S. goods.
Right now, the U.S. relies on exports to sell some of its surpluses. Currently, there are surpluses for grains, dairy, fruit and eggs that are pushing their prices down. If trade between the U.S. and other countries were to become more difficult, the U.S. could find itself dealing with larger surpluses, more wasted products, and more severe price deflation. This in turn could impact farmers, food producers, grocery retailers and ultimately consumers.
The future of NAFTA remains unclear for now. Former Georgia Gov. Sonny Perdue, Trump's pick for the U.S. Department of Agriculture, has a strong track record of negotiating and relying on foreign trade. In Perdue's interview for the job, he reportedly told Trump he felt the U.S. had been "tariffed out" of certain trade markets and the USDA secretary will need to work to level the playing field.
The letter to President Trump gives a clear indication that many food and agricultural companies want to maintain their prosperity through trade — and that means keeping NAFTA in some form, not getting rid of it.