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Home News Business & Inputs

Mexico Tariffs Off, Confusion Remains

Trump Tweets Say There's More to the Deal

AgNook Editor posted by AgNook Editor
June 23, 2019
in Business & Inputs, Hogs & Pigs
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Mexico Tariffs Off, Confusion Remains

Mexico tariffs are off the table for now.

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The Mexican tariffs are off, and that’s great news for just about everybody. Futures went back up, we’ve salvaged our trade relationship for the time being, and now there’s a path to approval of the USMCA. But Trump’s subsequent tweets about secret agreements between the US and Mexico have caused confusion with regard to two issues- the purchase of additional US agricultural goods, and Mexico agreeing to safe-third-country immigration measures.

Hog Futures Up After Mexico Tariffs Off the Table

Hog futures have bounced back after dropping about 4% during the first week of June. Traders had been nervous about disruptions to pork shipments if tariffs on Mexico were levied. The US exports 20% of its pork supply, and the largest customer by volume is Mexico. They bought $1.5 billion of our pork products last year.

According to The Pig Site, Trump planned to implement the Mexican tariffs on June 10 unless the country took action to stop the flow of illegal immigrants to the US border.

Fortunately, a deal was made, and on Friday, June 7 Trump called off the tariffs and announced that an immigration deal between the two countries had been agreed upon.

Traders are happy.

“We are very pleased that the tariffs were not implemented on our largest volume market,” the group said.

Rich Nelson, chief strategist for Illinois-based broker Allendale said,

“This is a valid rebound. There’s so many questions, I am not going to get too excited about it.”

Read more at thepigsite.com

Trump’s Tweets Cause Confusion on Two Fronts

On Buying More US Ag Products

The story could have ended there, but Trump has ben insistent that there’s more to the deal- even though nothing of that nature was mentioned in official announcements. Amie Simpson of Brownfield Ag News covered some of the confusion caused by Trump’s tweets.

Trump claims that it wasn’t just an immigration deal and drop of tariffs- but that he was also able to negotiate the purchase of more US agricultural goods. This tweet appeared on June 8 after the public announcement that the tariffs would be dropped.

MEXICO HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF AGRICULTURAL PRODUCT FROM OUR GREAT PATRIOT FARMERS!

— Donald J. Trump (@realDonaldTrump) June 8, 2019

Officials from Mexico disputed Trump’s claim. Mexico’s ambassador to the US appeared on the CBS television program “Face the Nation” on Sunday, June 9. She refused to confirm that buying more US agricultural goods was actually part of the deal. She did, however, expect agricultural trade to increase over time due to the absence of tariffs and the ratification of the USMCA trade agreement.

Read more at brownfieldagnews.com 

Mexican Foreign Secretary Marcelo Ebrard later said that this just wan’t true. The agreement was on immigration, not commerce. He said the two countries agreed upon the details announced June 7, and that if those actions didn’t curb illegal immigration they would then discuss other approaches.

“We do not have a specific agreement on products of that nature,” he said.

 Read more at agupdate.com

Nacha Cattan and Eric Martin of Bloomberg also reported that Mexico isn’t backing Trump’s twitter claim of a big farm deal. Three different Mexican officials said that Ag trade hadn’t been discussed. In addition, the US State Department’s communique called “US-Mexico Joint Declaration,” did not mention anything about Ag trade.

Read more at bloomberg.com

On Immigration Policy

The confusion continued. On June 10, President Trump hinted at several other secret agreements made between the two countries that would be revealed soon.

We have fully signed and documented another very important part of the Immigration and Security deal with Mexico, one that the U.S. has been asking about getting for many years. It will be revealed in the not too distant future and will need a vote by Mexico’s Legislative body!..

— Donald J. Trump (@realDonaldTrump) June 10, 2019

From the evidence available, the deal announced June 7 has Mexico committed to deploying its National Guard to their southern border with Guatemala- something they had been intending to do this before Trump’s tariff threats. The US has agreed to drop the proposed 5% tariffs on Mexican goods. That’s it.

What the Trump administration seems to be pushing for and what Trump is alluding to in the tweet above may be the expansion of a program that allows asylum seekers to return to Mexico to wait out their cases- called a safe-third-country measure. Immigrants would apply for asylum in the United States from the first designated “safe country” they pass through, and wait out approval there. Or, they would be forced to leave the US to wait out their immigration approval.

Mexico insists that they have not agreed to such a provision. It must be passed by local lawmakers. Their concern is that such a measure would drastically increase asylum applications to a level that the country could not process. Realistically, that’s probably true. The Mexican economy is barely growing, and an influx of people might become targets for involvement in organized crime.

Ebrard says he provided a full account of the agreement for transparency’s sake.

“They wanted something else totally different … to be signed,” Ebrard said. “But that is what there is here. There is no other thing.”

 Read more at agupdate.com

Trump Remains Insistent

But Trump has been insistent. He told reporters that he made a secret pact with Mexico that will take effect when he wants it to.

“That’s the agreement that everybody says I don’t have.”

Trump held up a piece of paper supposedly from the lengthy deal.

“I’m not going to say one way or the other, but I will tell you, right here is the story.”

Acting White House Chief of Staff Mick Mulvaney also spoke about the secret deal at a conference. He said Mexico is “doing real things” and policing its borders.

Read more at agweb.com

Conclusion

Similar to many other issues that have arisen during the Trump presidency, there’s little point on speculating how things will end up here. Just about everyone is pleased that the possibility of Mexican tariffs are off for now. Commodity futures went up, we have salvaged our trade relationship with one of our largest trading partners, and created a viable path for the passage of the USMCA. All while addressing one of Trump’s campaign promises- illegal immigration.

Whether or not Mexico will buy more US agricultural goods, we’re not really sure. Whether Mexico will agree to and pass a safe-third-country measure, we’re not really sure. Stay tuned.

Tags: Ag goodsImmigrationindustry and legislationmarketsMexicomigrantsPresident TrumptariffstradeU.S. Mexico Canada AgreementUSMCAWhite House

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