Trump and Trade Relations: Concerns for the Future of Agriculture

In just a week, the Trump administration may have already had a dramatic impact on international food relations. Global agriculture is a vital food source for the United States, and farmers and farm workers in the U.S. depend a great deal on revenue from foreign clients. In fact, roughly 20 percent of U.S farmers’ annual income is based on international sales.

The changes that Trump has already set into motion and the potential impending alterations may have disastrous effects on agriculture in the United States. It may also increase the cost of food for the average citizen as imports decrease as well.

Recent International Trade Changes

President Trump withdrew the U.S. from the Trans-Pacific Partnership treaty, an agreement with ten other countries that was designed to increase American exports. It specifically eliminated or decreased 18,000 taxes and related trade barriers on American products that would have otherwise put workers and businesses in the U.S. at a disadvantage in the international playing field. The U.S. Department of Agriculture predicted that it would have increased agricultural exports by over $7 billion on an annual basis for the next several decades.

Days later, President Trump also declared that its administration would build a wall on the Mexican border. It plans to fund the wall with a 20 percent tax on Mexican imports. The tax appears to be part of an extensive international tax overhaul that would increase import taxes on virtually every country.

In theory, the import tax would increase revenue for the United States. In actuality, however, it may decrease trade overall because international businesses and other entities will likely be less willing to trade with a country that has increased taxes on imports into the U.S. That also means that exports may decrease as well.

Concerns for Future International Trading

Experts have expressed concern that the Trump Administration is working toward revising trade agreements one country at a time, starting with the 103 countries that sell more products to the U.S. than they buy. China is by far the heavy-hitter when it comes to trade deficits-the U.S. has a $294 million deficit.

Agricultural trade is uniquely affected by trade wars. Food items experience price increases quickly, and shortages hit the industry hard. For example, from 2009 to 2011, the U.S. refused to allow trucks to cross the Mexican/United States border. Mexico instated 90 retaliatory tariffs in response. More than half of an estimated $984 million in damages affected agriculture.

Between talks of a wall and increasing import taxes on Mexico, a trade war may be on the horizon. The hostility could undermine years of economic cooperation and friendship between the United States and Mexico, which could hit the agricultural industry the hardest.

The top-selling items from Mexico to the U.S. include fresh vegetables, fresh fruit, and wine and beer. Mexico buys corn, soybeans, and pork and pork products most often.

Trump’s additional changes may target the North American Free Trade Agreement (NAFTA) and the Transatlantic Trade and Investment Partnership with the European Union. Since Canada and Mexico buy billions of dollars in exports, most of which are foods, withdrawing from NAFTA could have disastrous effects on the agricultural industry. Prepared foods, fresh fruit, and fresh vegetables are top U.S. exports to Canada.

Businesses Planning for Upcoming Trade Changes

Companies that deal on an international level, particularly those in agriculture, could be negatively affected by the future trade changes. They may already see changes as the trade terrain has even now “evolved” under the Trump administration.

Keeping on top of changes and planning for potential fluctuations will be an important part of business. Changes are happening quickly, and using the advice of a skilled international tax lawyer may be necessary to ensure that your business is complying with new laws and international restrictions.

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Melissa Thompson

Melissa is a mother of 2, lives in Utah, and writes for a multitude of sites. She is currently the EIC of and writes about health, wellness, and business topics.