Traders and industry analysts say campaign promises by President-elect Donald Trump to renegotiate the North American Free Trade Agreement have spooked the cross-border grain trade and driven down the value of the peso, said Reuters. “The first evidence of the slow-down” could appear today in USDA’s weekly Export Sales report, which will cover the week ending on Nov. 10, two days after Trump’s surprise victory.
Mexico is the No. 1 buyer of U.S. corn and pork exports and a major customer for wheat and soybeans, too. It is the third-largest market for U.S. farm exports, forecast to buy nearly 14 percent of ag exports.
“People are just waiting for the dust to settle and trying to get a better feel of where the currency markets are going,” said a U.S. corn exporter who spoke to Reuters on condition of anonymity.
Mexico is a major supplier of fresh fruit and vegetables to the U.S. market and is the largest source of farm imports by the United States — an estimated $22.7 billion, or 20 percent of all U.S. ag imports, says USDA’s Foreign Agricultural Service. By comparison, U.S. exports to Mexico would total $18 billion this fiscal year.
Canada, the other member of NAFTA, is the No. 2 market for U.S. ag exports and the second-largest source of U.S. farm imports.
The Mexican economist who was the country’s chief NAFTA negotiator told The Guardian that the United States would suffer along with Mexico if Trump carries out threats of protectionist measures such as a 35-percent tariff on Mexican goods. The countries are “producing many things together,” said economist Jaime Serra Puche, and “we would all lose competitiveness vis-a-vis the Chinese, Europeans and other regions.” He also said, “If we have to renegotiate, each country will ask for something, not just America … Mr. Trump needs to understand that principle if he reopens Pandora’s box.”