A Shot Across the Bow: NAFTA and Trade Border Wars

Feb 18, 2017

Mexico may be ready to hit America – and especially Iowa – where it hurts. Namely, in corn exports. Mexico is one of the top buyers of American corn, and Iowa is one of the top corn-producing states. In response to President Trump’s threats against Mexico, a Mexican senator said this week that he would introduce a bill that directs Mexico to buy its corn from Brazil and Argentina instead of the United States.

Dave Swenson, associate scientist in Iowa State University’s Department of Economics and College of Agriculture & Life Sciences, says this type of talk is to be expected given some of the rhetoric from the campaign trail.

“Right now we’re at the talking stage," says Swenson. "There’s somebody trying to shoot a shot across the bow of the trade talk. This is what happens when you threaten, basically, to have trade border wars. This is one of the consequences.”

Ultimately, though, Swenson points to the North American Free Trade Agreement (NAFTA) as protection for the U.S. agricultural economy.

“There are no duties or tariffs with regard to the flow of agricultural goods in both directions. Users of corn in Mexico are going to seek the lowest price, and that’s going to probably be reflected in the proximity to the largest supplier in the world, and that’s the United States. Indirectly, it’s Iowa -- and Illinois as well.”

NAFTA has recently come under fire itself from President Trump, who seeks to reform the agreement.