How Trump Created a Problem for U.S. Farmers

The President derided NAFTA as the worst deal ever, but the agricultural industry doesn’t think so.

In March Thomas Sleight, the president of the U.S. Grains Council, flew to Mexico to calm worried partners. His association represents U.S. farmers who trade abroad, and while it has connections in more than 50 countries, Mexico is one of the most important; lately, it’s been a bit uneasy there. The future of North American Free Trade Agreement (NAFTA) is uncertain, and after Trump took office Sleight heard that some Mexican partners they’d worked with for years were acting a bit “frosty.” So Sleight visited with Mexican farmers from the Yucatán and from the country’s western coast, and in both regions he heard a common complaint.

Donald Trump, as a presidential candidate, called NAFTA a horrible deal for the U.S. and vowed to withdraw from the pact—though he has walked back those comments, saying he’ll renegotiate the deal with Mexico and Canada. But NAFTA is a behemoth, and, while Trump might have the basis for an argument when it comes to manufacturing, which has seen a massive workforce decline since NAFTA went into effect in 1994 (though some studies have shown that it is mechanization not free trade that have hurt those jobs), agricultural trade is seen as a success on all sides of the border. Since it was signed, Canada and Mexico have become by far America’s largest export markets for products like corn, pork, beef, dairy, soybeans and poultry, and overall total exports have grown from $9 billion in 1993 to $41 billion by 2014. On the ground that means about one of every 10 planted acres in the U.S. feeds Mexicans or Canadians. So when Trump crisscrossed the U.S. damning NAFTA as a failure, he created a problem for U.S. agriculture that had previously never existed.

“They were annoyed,” Sleight said of his customers, who wanted to know just why the president thought NAFTA was such a bad deal. They also weren’t pleased, Sleight said, about Trump’s general comments on Mexicans, whom Trump described as “rapists” and “criminals.”

“They were insulted, really,” Sleight said. “For us, you don’t do that to your best customers.”

Last week, the top agricultural officials from the U.S, Canada, and Mexico met in Georgia to discuss the upcoming NAFTA renegotiations. While each country said there were some “irritants” in the deal, they overwhelmingly wanted NAFTA left alone. But because of Trump’s professed opposition to aspects of the agreement, farmers in the Midwest, import-and-export associations in southern Arizona, and big national agricultural groups like the one Sleight runs are already seeing a negative impact, and it may be too late to undo some of the uncertainty. On his visit to Mexico, Sleight said he constantly heard talk from Mexican farmers of a “Plan B,” as in a backup option in case they couldn’t buy or sell their products to the U.S. Some Mexican customers had even met the week before with representatives from Argentina. “You know,” Sleight told me, “those markets are critical. If we were to lose those you can’t make that up. You can’t just snap your finger and make that up.”

Like with any trade deal, NAFTA created winners and losers. In Florida, the tomato industry took a hit as it was forced to compete with western Mexico’s similar growing climate. Mexico’s grain industry couldn’t compete with the much larger and mechanized Midwestern operations. But because Mexico couldn’t meet its own demand for grains to feed livestock, Mexican ranchers could import U.S. grains at lower prices, spurring the Mexican livestock industry. Now ranchers raise their animals and oftentimes export them to the U.S. to be slaughtered, processed into meat, and, in many cases, shipped back to Mexico to as food. Canada, on the other hand, signed a bilateral trade deal with the U.S. in the late 1980s, so when NAFTA came much of the trade jockeying had already worked itself out.

Few in the agriculture industry believe NAFTA will end, and those I spoke with said Trump is a businessman; there’s no way he’d end it all. “But in the meantime,” Jungmeyer said, “when you have a threat, or even the possibility of a threat, of shutting down trade, that creates a real concern in people’s lives. They certainly are very worried about what next year looks like.”

For example, since Trump started his talk of shutting NAFTA down, the Mexican peso has risen and fallen on his every word and tweet, plunging after he took office, only recently to stabilize. Investors are skittish about what might happen, and even some foreign investors working in Mexico have put planned expansions on hold. More pointedly, since Trump took office—and as Mexican farmers explore their “Plan B”—U.S. soybean exports to Mexico have dropped 15 percent, the first of any kind of drop in four years; corn has dropped 6 percent; and chicken dropped 11 percent, the biggest decline in 14 years. Rural states are worried. And in many cases, they’re the same states that helped Trump win. Meanwhile, what is Mexico doing? It’s looking elsewhere.