On January 23, 2017, the headline read, “Trump ends U.S. ties to TTP.”
It shouldn’t come as a surprise. He said that was one of the first actions he would take as president. Now we know he was serious, and he’s a man of his word, which is scary because of his many other statements.
NAFTA is the next big concern for the ag industry. Trump mentioned numerous times during his campaign that he would be renegotiating this trade agreement between the U.S., Mexico and Canada.
In Calgary, Stephen Schwartzman, senior business advisor to President Trump, tried to reassure Canadians that the relationship between the U.S. and Canada was a special relationship and that Prime Minister Trudeau should not be overly concerned about NAFTA renegotiations.
“There may be some modifications, but, basically, things should go well for Canada in terms of any discussions with the United States. Trade between the U.S. and Canada is really very much in balance and is a model for the way that trade relations should be.”
I feel reassured (not) and I can’t wait to hear what these modifications might be. Mr. Trudeau, I feel a big wedgie coming our way and you, as our leader, are going to have to stand up and say NO to the bully next door before he takes all our candy and lunch money!
A few days before Trump’s inauguration, the U.S. Dairy Industry and state departments of agriculture jointly sent him a letter stating that Canada’s dairy policies are protectionist and meant to block imports from the U.S., and further that Canada’s policies are a direct violation of the country’s NAFTA commitments NAFTA. The groups urged Trump to take action.
Rest assured that when Trump does renegotiate NAFTA, the outcome —if he gets his way — will be swayed heavily in favour of U.S. interests unless our people are prepared to stand their ground.
On other fronts
What else has Trump done that could impact the Canadian ag sector?
His ongoing war of words with China over trade issues has prompted the Chinese to increase anti-dumping duties and tariffs on distilled dried grains from the U.S.
This issue has been under investigation for over a year already, but no doubt recent tensions have inspired the Chinese to act, with the intent of letting Trump know that they will not sit quietly by while he verbally chastises them for unfair trade practices. The Chinese decision to impose further tariffs on DDGs comes only 10 days after previous action by the Chinese government to increase tariffs on imported U.S. ethanol from five to 30 per cent.
Both of these actions have, in effect, shut down shipments of DDGs and ethanol from the U.S. to China. We in Canada are likely to see a ripple effect in our markets. The backlog of DDGs in the U.S. will have to go somewhere. This won’t help our feed grains markets in a year when we have ample feed stocks. The price for feed grains has already started to soften and will likely continue to do so as we head towards spring.
This could mean more feeder cattle headed to the U.S. to use up the excess DDG stocks. That won’t help our slaughter and packing industry here, and it will have a direct negative impact on our feed grain prices.
The only thing I see that Trump has done that is helping Canada is his talk of bolstering the U.S. economy with more jobs and domestic manufacturing. This has pushed the U.S dollar to all-time recent high levels, which in turn has pushed the Canadian dollar into the low- to mid-$0.70 range, which is very helpful when we are selling our grains into the U.S. or elsewhere.
This is going to be a very interesting and unsettling year for world agriculture trade with numerous elections slated to take place in EU countries. Some predict that a number of the countries will follow Britain’s path and exit the EU, which will bring much uncertainty.
The issues surrounding world currencies and numerous countries whose currencies have been devalued will also make world trade of all goods a very tense game to play.
Add President Trump to your list of things that could impact your farm’s bottom line. Pay close attention to what’s happening in Washington — the ripple effects will not stop at the 49th parallel.