Tariff wars have consequences. CNN reports Armando Rios Piter, a Mexican lawmaker, is proposing a bill as retaliation for President Trump’s threats. The measure would somehow (the mechanism is not made clear) cause Mexico to begin importing its corn from South America instead of the U.S.
The report doesn’t explain much in depth, so let me note that you should take it with a grain of salt. Rios Piter is a member of the socialist PRD party — quite radical politically, and third-place electorally by a long way in the Mexican Congress behind the center-left PRI (the party of President Enrique Peña Nieto) and the conservative PAN.
Last September, Rios Piter was talking about passing a bill to expropriate Americans’ property in Mexico in the event that Trump won. So his word has a somewhat smaller chance of translating into anything real than the average bill proposed by Bernie Sanders in our own Senate.
Still, U.S. corn farmers have a lot to lose if this kind of thinking goes mainstream south of the border — as much as a quarter of their export market.
American farmers sent $2.4 billion of corn to Mexico in 2015, the most recent year of available data. In 1995, the year after NAFTA became law, corn exports to Mexico were a mere $391 million.
Experts say such a bill would be very costly to U.S. farmers.
“If we do indeed see a trade war where Mexico starts buying from Brazil … We’re going to see it affect the corn market and ripple out to the rest of the ag economy,” says Darin Newsom, senior analyst at DTN, an agricultural management firm.
Mexico is the number two destination for U.S. corn, consuming 26 percent of U.S. corn exports. (Japan is number one, at 29 percent.) You can perhaps get a sense, then, of why farmers like free trade. Today, they export about six times as much corn to Mexico as they did before NAFTA.
