In an attempt to clarify rumors earlier in the day, the White House issued a statement late Wednesday night saying they WILL NOT officially withdraw from NAFTA “at this time”. Instead, President Trump had spoken to both President Enrique Pena Nieto of Mexico and Prime Minister Justin Trudeau of Canada and all parties have agreed to start a renegotiation of the long standing pact between the countries.
News that Trump may withdraw from NAFTA roiled agricultural and currency markets yesterday as traders digested the implications of such a move. Both the National Corn Growers and a joint statement from the National Association of Wheat Growers and US Wheat associates urged the President to hold off on such a move. The statement from the wheat growers said:
“USW and NAWG understand that there are several elements of the trade agreement that could be re-examined and modernized. However, we believe withdrawing from NAFTA would be a serious mistake. It could lead to new tariffs on U.S. wheat and threaten to undermine the long-standing, loyal relationship U.S. wheat farmers have built with Mexico’s wheat buyers and food industry. That would be devastating to U.S. wheat farmers already facing unprofitable prices and increasingly aggressive wheat exporting competitors.”
Mexico alone moves between the top two buyers of US corn and is the top buyer of US originated wheat and barley. They are also big buyers of US originated pork and beef exports.
While government traditionally moves slow, there is some incentive to speed these discussions along. Mexico has a presidential election coming up in 2018 and current President Pena Nieto is ineligible to run due to term limits. Negotiators for the US would be the still to be confirmed as US Trade Representative Robert Lighthizer.