Trade Affected by Mexico tariffs

Presidents Calderon and Obama
Every year, about $153 billion in U.S. agricultural production is affected by Mexico’s tariffs against the United States, according to a study by Texas A&M University.

The figure takes in every cost to produce the exports, from supplies to labor and transport. The tariffs were imposed as retaliation for the United States’ failure to continue cross-border trucking.

The study, requested by the San Antonio-based Border Trade Alliance and issued last week, breaks down affected agricultural production state by state, showing how Mexico targeted states where members of Congress have opposed cross-border trucking.

The study’s author, C. Parr Rosson III, director of the university’s Center for North American Studies in College Station, said lifting the agricultural tariffs would restore about 12,000 U.S. jobs, 1,550 of those in Texas.

The alliance hopes to use the study to persuade Congress to once again fund a cross-border trucking program it killed in 2009, leading to the tariffs.

Leaders announce talks

U.S. President Barack Obama and Mexico President Felipe Calderón earlier this month announced negotiations for an agreement to start a permanent cross-border trucking program, allowing Mexican trucking companies and drivers to make U.S. deliveries beyond the border zone. But Congress first must approve funding for the U.S. Department of Transportation to authorize Mexican trucking companies to operate in the United States.

A cross-border trucking program would bring the United States into compliance with the North American Free Trade Agreement, which called for cross-border trucking to be phased in starting in December 1995.

Once the agreement has been signed, Mexico will reduce by half the percentage of its retaliatory tariffs, covering both agricultural and manufactured goods. The other half will be lifted when the United States begins authorizing Mexican trucking companies to make U.S. deliveries.

Agricultural goods account for about 70 of the 99 U.S. products on the tariff list, the Texas A&M report states. The tariffs affect about 12 percent of all U.S. agricultural exports to Mexico, and agricultural production in at least 41 states. Mexico targeted $2.4  billion in goods for tariffs annually, including $1.5 billion in agricultural products. But those goods represent $153  billion in agricultural production, according to Rosson’s study.

Those hit hardest

The top five states harmed by the tariffs are Iowa, California, Minnesota, North Carolina and Wisconsin, according to the report. Fourteen other states have impacts of at least $1 billion in agricultural production each. Hog production, cheeses and fresh produce are the hardest-hit categories.

Rosson said it appeared California was hit hard in 2009 because the speaker of the House at the time, Democratic Rep. Nancy Pelosi, was from there.

“Nobody ever said that, but it makes sense politically,” Rosson said.

Texas fared well by comparison, with $194.07 million in production affected by the tariffs despite Texas’ large agricultural sector and its proximity and high trade volumes with Mexico, according to the Texas A&M report.

“Texas kind of dodged the bullet on this,” Rossen said.


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