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August 27, 2018

U.S., Mexico Reach Trade Deal Agreement

 |  By: Jim Dickrell

President Donald Trump announced this morning that the United States and Mexico have reached agreement on their trade dispute, but details are still sketchy on what it means for dairy.


When the U.S. imposed tariffs on steel and aluminum imports from Mexico earlier this spring, Mexico retaliated by imposing 20 to 25% tariffs on U.S. dairy exports to Mexico. Mexico is the United States' number one dairy trading partner.


Today’s agreement will supposedly end this dispute, but dairy industry officials have not yet been able to confirm when the tariffs will end. The negotiation between the U.S. and Mexico is part of the North American Free Trade Agreement, and the U.S. must still negotiate a final agreement with Canada before the entire package can be submitted to Congress for its approval. There is some hope the negotiations with Canada can be restarted and even concluded this week, but that remains to be seen. 


Though earlier reports had suggested the tariffs between Mexico and the United States would be lifted once an agreement was reached between the two countries, that might not be true. The thinking now is that the tariffs will remain in place until a complete, three-way agreement with Canada, Mexico and the United States is reached, say sources.

A new study commissioned by the U.S. Dairy Export Council (USDEC) shows that trade disputes with Mexico and China could cost U.S. dairy farmers 64¢/cwt through 2023 if the disputes remain in place. Loss of exports to Mexico account for about 27% of that total loss, which would equate to 17¢/cwt. USDA released its “Market Facilitation Program” tariff aid program Monday afternoon, which provides just 12¢/cwt in relief based on 50% of a herd’s annual production. Other restrictions also apply (see story).

A fact sheet released by the United States Trade Representative today also stated that “for the first time in a United States trade agreement, Mexico and the United States agreed not to restrict market access in Mexico for U.S. cheese labeled with certain names.”


The GIs, or geographical indications, had become a sticking point because the European Union had negotiated exclusive rights with Mexico for some cheese names they claimed as their own. However, USDEC has not yet been able to confirm which U.S. cheese names will be exempted.