May 17, 2019

Rollback Of Steel, Aluminum Tariffs "Big Plus" For Dairy

 |  By: Mike Opperman

President Trump announced today that steel and aluminum tariffs would be removed on goods coming from Canada and Mexico, a move that many hope will lead to ratification of the U.S. Mexico-Canada Agreement (USMCA). In a joint statement the U.S. and Canada agreed that the metal tariffs would be lifted by Sunday. Canada would then lift retaliatory duties it had assessed on U.S. goods, according to Jim Wiesemeyer, ProFarmer Washington analyst. 

The tariffs had sparked retaliatory tariffs on U.S. goods by both countries. That included cheese exports to Mexico, the number one buyer of U.S. cheese. Mexico has yet to declare when retaliatory tariffs would be lifted.

"When they {Mexico} retaliated against the U.S. steel and aluminum tariffs, their first step was to put a tariff on cheese," Mike North, president of Commodity Risk Management told AgDay host Clinton Griffiths. "Now, cheese is huge for this country, not just Wisconsin, where I'm from, but you know, as a country 48% of our milk goes to making cheese in this country in one way, shape or form, and Mexico is one of our biggest buyers of cheese as it leaves the country, so for us to be able to get past that discussion and to open up the border again to a free flow of cheese pushes a lot of milk across the border that hasn't been moving for the last 12 months. That's a big plus for dairy men around the country. ​" 

Other farm groups applauded the news. 

“This is an important development for the U.S. dairy industry, and we applaud the hard work of negotiators from all three countries that made it possible as well as the numerous members of Congress that have insisted upon the need to resolve the Section 232 metal tariffs dispute with our North American partners,” said Tom Vilsack, president and CEO of the U.S. Dairy Export Council. “If Mexico lifts its tariffs on U.S. dairy in response, it would be a welcome return to normalcy with our number one export market. It would also build vital momentum for swiftly advancing USMCA towards passage.”

“America’s struggling dairy farmers are in need of some good news, and today’s announcement certainly helps,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “This paves the way for Mexico to drop retaliatory tariffs that have harmed dairy, and for Congress to take its next step to help our producers – to vote on USMCA and quickly ratify it.”

"The International Dairy Foods Association is very pleased with news of this comprehensive agreement to remove Section 232 tariffs as well as retaliatory tariffs, delivering a more level playing field for U.S. dairy with our North American partners," says Michael Dykes, president and CEO of the International Dairy Foods Association. "With this deal in place, it is now essential that Congress turn its attention to swift ratification of the U.S.-Mexico-Canada Agreement to ensure that we are maintaining and growing markets with our most important trading partners, especially in this time of uncertainty for our agricultural economy."

Even though the tariffs are lifted, uncertainty remains about when the USMCA will be approved.

The lifting of the metals-related tariffs was seen as a necessity to get an eventual vote in the U.S. Congress on USMCA. But the time line on when an actual vote will take place is murky," Wiesemeyer says. "The key to that is primarily up to House Speaker Nancy Pelosi (D-Calif.), who has said she and many Democrats have issues relative to labor and environmental language enforcement, particularly regarding Mexico. A big hurdle has been lifted, but lobbying by the Trump administration and lawmakers supporting USMCA will now accelerate."