The U.S. should consider the unintended consequences of constricting global commerce.
The failure of the Republican health care bill has GOP leadership on the defensive, and markets have taken notice. Stock activity suggests that investors are doubtful that the Trump administration will be able to deliver on its business-friendly agenda of tax cuts and infrastructure spending.
Investors are right to be wary, not just because of tax reform, but also because of President Donald Trump’s rhetoric on radically revamping America’s trade deals in ways that may damage the global economy. So far, the president's posture has been mostly talk, but even heated rhetoric can have unintended consequences.
Case in point: Mexico, which has been the target of much of Trump’s ire on a number of fronts, is now looking to import its corn from countries other than the U.S. Several states that Trump won handily produce the bulk of America’s corn, and they’re worried about the economic fallout from the president’s tough talk.
"For U.S. corn producers, Mexico is their No. 1 export customer," said Thomas Sleight, the president of the U.S. Grains Council. "They are concerned about maintaining excellent relationships with long-standing customers that they've built over generations.”
They are right to be concerned. Last year, Mexico imported $2.32 billion worth of corn, which was roughly 10 percent more than it imported in 2015. But that revenue is now at risk in the wake of Trump’s call to renegotiate the North American Free Trade Agreement, which has defined the parameters of U.S./Mexican trade relations for over two decades.
Trump has repeatedly called NAFTA a “disaster,” and uncertainty about the agreement’s future is fueling Mexico’s search for different trading partners, notably Brazil and Argentina, both of which are in a position to replace the United States as Mexico’s primary trade partner for corn.
"We do not know what the United States will propose,” said Jose Calzada, Mexico’s agriculture secretary. "We have to act first to be sure that when we arrive at that negotiating table we are starting from a position of total strength."
The fact is that Mexico imports billions of dollars of American goods, and it has far more leverage at the negotiating table than the president is willing to admit. It is not in the best interests of either country to allow rhetorical bluster to damage long-standing relationships that have benefited people and businesses on both sides of the southern border.