Mexico Will Be Biggest USMCA Test

An article on Dairy Herd Management

As the U.S., Mexico, Canada trade negotiations are underway, agriculture groups are united around one priority: protect the integrated North American market that has become critical for U.S. producers. But those close to the Trump administration say it’s not so simple.

Former U.S. Trade Representative Bob Lighthizer says Mexico will likely be the biggest challenge in the talks, not Canada, pointing to the current trade deficit with Mexico as the major reason why. The latest round of discussions between the U.S. and Mexico as part of an ongoing annual review process was held in Mexico last week. The two countries agreed on a formal fourth round of bilateral negotiations, which is scheduled to be held in Washington, D.C. in early September.

Also adding another layer of uncertainty to USMCA discussions, President Donald Trump announced last week plans to impose a 50% tariff on certain Canadian goods, escalating trade tensions between the two countries after months of political friction. The administration used Section 338 of the Tariff Act of 1930 to respond to what it calls discriminatory treatment of U.S. products. The tariff increases, which cover a range of Canadian exports including wine, honey, textiles, fishing rods, jewelry and furniture, are set to take effect Aug. 19. Unlike previous tariff actions against Canada, products covered under the U.S.-Mexico-Canada Agreement will not be exempt from the new duties.

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