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 ˿����Ƶ 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 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 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. ˿����Ƶ 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. ˿����Ƶ of Commerce, issued a 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.

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Throughout the country, U.S. agricultural exporters, including soybean and pork producers, have taken major hits in their economic numbers as a result of the tariff war with China.

Now, The Trump Administration will spend $16 billion to help farmers hurt by the US-China trade war, Agriculture Secretary Sonny Perdue announced yesterday.

The fear among farmers, importers and consumers in Arizona is that Chinese tariffs placed on their goods will keep them out of the Chinese market for a long time.

“What’s going to end up happening is you end up having an impact on those businesses that import,” said economist Jim Rounds. “The tariffs will end up passing more costs to consumers, so you and I will be paying for those tariffs. In the meantime, people will adjust and businesses will adjust their supplier network from other countries. But this will create a disadvantage with China.”

China struck back at the U.S.’s tariff hike on $200 billion of imported Chinese goods with tariffs on about 5,000 types of American products reaching about $60 billion. Some of the major components of those tariffs are agricultural products including beef, soybeans, and vegetables.

China is Arizona’s third-largest exporter, shipping out goods such as meat products and cotton. According to the Arizona Beef Council, Arizona’s cattle community contributes about $435 million a year to the state’s GDP, and exports about $525 million of its total beef output to places such as China.

“I think it’s all very delicate,” Rounds said. “Trade agreements for us on the border typically mean issues with Mexico. When it comes to China, however, I think most Americans in general, especially in Arizona, feel that China really hasn’t played by the rules when it comes to trade. I think it’s been very difficult for us to swallow the way China has gone about this.”

Pig farmers in the country have faced two separate rounds of 25 percent punitive tariffs from China on their exports last year. The value of pork from the United States has dipped 14 percent so far this year and producers of the commodity are losing about $8 per pig because of the trade dispute.

“I think what you do have is a lot of conversation toward trade, which is very good,” Jaime ˿����Ƶlain of J.C. Distributing in Nogales said. “It’s always very good to have these discussions and issues. This will help more people realize where their products come from and how they get their goods and the costs of those goods. I think the American public needs to educate themselves a lot more.”

The scuttlebutt around the farming and import community in Arizona is that hopes are now being turned toward finalizing the United States-Mexico-Canada Agreement (USMCA), or even expanding business with the European Union, which has called for more soybean imports.

“Our efforts should never turn away from Mexico. I think it’s something we need to continue to foster. It behooves us to have a very good relationship with our southern and northern partners,” said ˿����Ƶlain. “We should never take our eye off the ball with that. I do believe that the ratification of the USMCA is extremely important for our trade future. That should be the number one thing we should focus on. But with China, the tariffs most certainly need to be addressed.”

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