Thursday, February 02, 2017

How a 20% border tax could set off an international food fight

The first week of the Trump administration may signal a tough road ahead for agriculture. First, the president withdrew from the Trans-Pacific Partnership treaty, which was expected to boost U.S. agricultural exports by more than $7 billion annually over the coming decades by dropping trade barriers among 12 North American and Asian economies, according to the U.S. Department of Agriculture. Four days later, Trump administration officials said the U.S. could finance a new wall on the Mexican border through receipts from a 20% tax on Mexican imports. That appears to be part of a broader corporate tax overhaul, which would dun goods imported from every country. The announcement, followed by a flurry of clarifications and caveats, set off worry that the U.S. was embarking on a trajectory that could lead to a trade war. That could hit home especially hard for U.S. farmers, who get about 20% of their annual revenue from trade — much of it from the very countries Trump could target. Trump’s policy presents a conundrum for farmers and ranchers, a traditionally Republican constituency that supplied him with key support in swing states. The countries with the worst trade imbalances happen to be among agriculture’s best customers, including two of Trump’s perennial punching bags: China and Mexico. Overall, U.S. agriculture and related products amassed a $5-billion surplus worldwide, according to the USDA. As a result of the 14 free trade agreements the U.S. signed with 20 countries, exports of grains and feeds, dairy products, poultry, beef, pork, fruits and vegetables each experienced growth of more than 15% since the 1990s, according to the USDA. Now, more than half the U.S. production of wheat, rice, cotton and nuts is sold abroad. Meanwhile, some 85% of the fish we consume comes from abroad, while imports account for 19% of all U.S. food consumption...more

No comments: