American consumers and industries could face price hikes on fresh produce and aluminum products as trade conflicts with Arizona’s top two trading partners heat up.
Just weeks after the new “tariff-free” United States-Mexico-Canada Agreement (USMCA) went into effect July 1, President Donald Trump announced he was reimposing a punishing 10 percent tariff on Canadian aluminum. Canada retaliated in kind the following day.
Meanwhile, a domestic trade dispute over fresh produce from Mexico is threatening to stir up a new round of tariff battles as well.
Both measures could disrupt relations with Arizona’s top two trading partners, Mexico and Canada, during a time when many Americans are faced with financial hardships due to COVID-19 shutdowns, opponents said.
“Tariffs are taxes, plain and simple,” said Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry. “As trade partners with Canada and Mexico, we see every day how Arizona benefits from these relationships.
“Efforts should be focused on expanding market access for American manufacturers and growing economic opportunities with our closest partners to lead to a greater variety of goods and price competition for U.S. consumers.”
Here is a rundown of what’s happening:
U.S. hearings on produce from Mexico alarm industry
Of concern to importers and exporters is a long festering domestic battle over a rarely-used “trade remedy” to affect seasonal produce coming from Mexico like tomatoes, peppers and strawberries.
For years, farmers in the Southeast have made a number of claims about Mexico, including that government subsidies to agriculture have harmed American farmers who cannot compete with the low price of produce flooding north over the border.
During heated hearings before U.S. trade officials last week, representatives from states like Florida called for the seasonality rule — known as Section 301 — to be enforced to improve the domestic competitiveness of American farmers.
Representatives of Southeast agriculture testified that Mexican tomatoes and other produce are being sold well below fair market prices — a practice known as dumping — which it’s creating “unfair” challenges for growers to compete.
But opponents dispute those claims and have the research to prove it, said the Fresh Produce Association of the Americas (FPAA), which is headquartered in Nogales, Arizona.
A recent analysis by the University of Arizona, for example, shows that since 1995, the U.S. has used up to 41 percent of its allowable subsidies while Mexico has averaged just 2 percent, the FPAA said last week. Also, the analysis did not include the $28 billion in aid to U.S. farmers to compensate them for the financial harm caused by trade disputes with foreign trading partners last year.
The so-called trade “remedy” would hurt American pocketbooks by instigating costly new tariffs on Mexican imports, the FPAA said.
“Consumers would pay more for strawberries, blueberries, bell peppers, tomatoes, sweet corn and watermelon if tariffs or quotas are put on these items through a 301 trade action as requested today by the Florida Fruit & Vegetable Association,” the FPAA stated in a press release that countered the “rhetorical” claims one by one.
Action could instigate another tariff war with Mexico
Imposing the action potentially could instigate “numerous and unending tit-for-tat trade wars” with Mexico just weeks after the USMCA went into effect, the FPAA said.
That could imperil $40 billion in U.S. agricultural exports to Mexico and push up the cost of fresh produce from Mexico, said the FPAA, which represents 120 U.S. member companies involved in importing and marketing fresh fruits and vegetables grown in Mexico and distributed across the U.S. and the world.
Bipartisan front in Arizona opposes attack on “free trade”
Arizona’s congressional delegation has stepped in to intervene, calling on the White House to reject the proposal.
“This trade remedy would affect Arizona’s economy, the U.S. agribusiness supply chain, and consumers all across the country who enjoy a diverse selection of tomatoes at low prices,” said a letter sent by nine Arizona congressional members to the U.S. Trade Representative Robert Lighthizer.
The letter was signed by Arizona U.S. senators Kyrsten Sinema (D) and Martha McSally (R) and representatives Tom O’Halleran (D), Raúl M. Grijalva (D), Andy Biggs (R), David Schweikert (R), Ruben Gallego (D), Debbie Lesko (R) and Greg Stanton (D).
“Such a provision would run counter to consumer preferences, undermine the spirit and benefits of free trade, risk reciprocal or retaliatory actions from our trade partners, and harm U.S. industries in order to artificially support a small segment of regional growers’ interests,” the letter said.
Canadian and U.S. aluminum hit with new trade taxes
In another blow to many industries that rely on aluminum, President Trump reimposed tariffs on Canadian aluminum this month. Canadian Prime Minister Justin Trudeau responded the next day with retaliatory tariffs on $2.7 billion worth of U.S. aluminium products.
During a speech at the Whirlpool Corporation Manufacturing Plant in Clyde, Ohio August 6, the president said that the tariffs were being reimposed to stop Canadian aluminum producers from flooding the U.S. with exports that will “kill all our aluminum jobs.”
“Canada was taking advantage of us, as usual, and I signed it…because the aluminum business was being decimated by Canada,” Trump stated. “Very unfair to our jobs and our great aluminum workers.”
“To be a strong nation, America must be a manufacturing nation and not be led by a bunch of fools,” the president said. “That means protecting our national industrial base.”
Industry leaders, U.S. Chamber oppose tariffs
But many aluminum manufacturers and industry advocates said the tariffs will only push up costs for producing items like cars, household appliances and beer cans.
Calling the tariffs “a step in the wrong direction,” Myron Brilliant, the head of international affairs for the U.S. Chamber of Commerce, issued a statement opposing the new trade duties. They will raise costs for American manufacturers and draw retaliation against U.S. exports.
“Today more than ever, American businesses of all sizes depend on trade as an engine of growth and job creation,” he said.