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Report identifies states most dependent on NAFTAReport identifies states most dependent on NAFTA

Farmers for Free Trade releases report identifying top 10 states that would experience massive tax on products from U.S. farmers with no NAFTA.

Jacqui Fatka

January 24, 2018

4 Min Read
Report identifies states most dependent on NAFTA
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Farmers for Free Trade, a bipartisan, grassroots campaign working to rebuild support for trade, released a new report that outlines specific threats facing the states most dependent on agricultural trade with Mexico under the North American Free Trade Agreement (NAFTA) if America withdraws from the pact. The report, "The NAFTA Withdrawal Tax," looks at the percentage tariff increase the major commodities from each state would face in Mexico.

“Just as farmers and ranchers have been among the biggest beneficiaries of NAFTA, they’d also be the ones to feel the most pain if America withdraws from the pact,” Sens. Max Baucus (D., Mont.) and Richard Lugar (R., Ind.) - the Farmers for Free Trade co-chairs - said following the release of the report. "That’s because NAFTA withdrawal would result in a massive tax on the products American farmers grow and produce."

In the report, Farmers for Free Trade identifies the 10 states whose agricultural sectors would be the most negatively affected by NAFTA withdrawal with respect to trade with Mexico and outlines the steep price they would pay in the event of withdrawal.

“These taxes would lead to fewer products sold and declining profits. They would result in our farmers selling less to Mexico and declining prices, which is the last thing farmers can afford, particularly right when prices are already low and global supplies are high,” Baucus and Lugar said.

Related:U.S. ag forced to downsize if NAFTA withdrawn

The states profiled in this new report are: (1) Missouri, (2) New Mexico, (3) South Dakota, (4) Texas, (5) Nebraska, (6) Iowa, (7) Kansas, (8) Arkansas, (9) North Dakota and (10) Minnesota. 

Missouri, ranking number one on the impact list, exported 51% of its total agricultural exports to Mexico. In 2016, it exported $35.76 million in dairy exports. If the U.S. withdraws from NAFTA, Missouri would see a 45% tax on cheese. Meat and meat packaging products similarly represented a $39.61 million export market in 2016. Withdrawal of NAFTA would institute a 25% tax for beef and up to 20% for pork.

Missouri’s oilseeds and grain products represent the largest segment of exports, reaching $438.63 million for oilseeds and grains and  $3232.62 million for grain and oilseed milling products in 2016. Soy flour, for example, would face a 20% tax without NAFTA.

New Mexico ranks number two concerning the impact it would feel after a NAFTA withdrawal. It exports 45% of its total agricultural products to Mexico, with dairy representing half of all of its exports, valued at $45.73 million.

For the entire country, $170 million in dairy exports went to Mexico in 2016. If Mexico places a 45% tariff on dairy products, it could create an additional $76.5 million in duties yearly without NAFTA in place.

Related:LIVESTOCK MARKETS: Economists say NAFTA important for meat industry

As for pork, $1.3 billion of exports went to Mexico in 2016. If the U.S. withdraws from NAFTA, Mexico’s 10% tariff on pork would result in an additional $130 million in duties per year on all pork sales.

Chicken tariffs would be astronomical, reaching a tariff of up to 75%. For the $871 million in exports to Mexico, the additional yearly duties would come to $653 million.

South Dakota sends 39% of its total agricultural exports to Mexico. In 2016, South Dakota exported $134.87 million of meat and meat packaging products and $71.65 million in beverages, with beer seeing a 20% tax without NAFTA.

Texas also ranks high on the list, with $1.58 billion of meat and meat packaging products going to Mexico in 2016. Dairy represents 11% of the Texas agricultural economy, and $361.93 million in dairy exports went to Mexico in 2016.

Baucus and Lugar explained that the tariffs, or tax hikes, in these states would also be felt in rural communities.

“It’s not only farmers who would pay the price for NAFTA withdrawal; rural communities, which run on the engine of the farm economy, would suffer, too. If farmers have less in their pockets, they spend less at local stores (and) restaurants and contribute less to local schools and community organizations," Baucus and Lugar stated. "Jobs throughout the agricultural production cycle that depend on trade suffer, including growers, harvesters, processors, packagers as well as grain elevator operators, railroad workers and truck drivers. The simple truth is that rural communities don't work well when their economic engine is hurting."

View the full impact report here.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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