ANKENY, Iowa -- Thursday night’s announcement that a universal five percent tariff on Mexican imports caught many off guard, including the Iowa Soybean Association.
“It was definitely a big surprise to us,” said Grant Kimberley, director of Market Development at the Iowa Soybean Association.
President Donald Trump said he will impose the tariff on June 10 as punishment for Mexico not doing enough to curb illegal immigration into the United States. The tariff would steadily increase until reaching 25 percent by October. Typically, immigration disputes are not dealt with through trade ramifications. Sen. Chuck Grassley issued a statement reading in part:
"Trade policy and border security are separate issues. This is a misuse of presidential tariff authority and counter to congressional intent."
Sen. Joni Ernst also replied.
“We can’t use tariffs all the time for every single situation. I think we need to continue to be good partners with Mexico,” Ernst said.
Mexico is one of America’s biggest trade partners. In 2017 Iowa imported $132 million worth of tractors, $79 million worth of vehicle parts and $59 million in transportation vehicles.
“All these agriculture products are really important to our economy which translates back into rural America. [It means] dollars that farmers have to spend to buy new tractors at John Deere, and that means how much the John Deere factory can run, and how many people they can employ. It all trickles back through the economy,” said Kimberley.
The U.S. also imported nearly $12 billion worth of fresh fruit and vegetables and $3.6 billion in wine and beer. All Iowans would see prices of those items go up if the tariffs are in place. Meanwhile, farmers are worried about retaliation.
“Mexico by far is our largest market for processed soybean products and it's important for other customers, livestock customers like the pork industry, cattle industry, and our corn industry too,” said Kimberley.
In 2017 Mexico imported $777 million worth of corn and $143 million worth of soybean products. The Iowa Soybean Association says with the trade war between the U.S. and China, farmers relied heavily on an open Mexican market.
“Soybeans are a very export dependent crop. About 60 percent of the U.S. soybean crop gets exported every single year. So, we have to have exports to markets; especially the markets that are next door to us,” said Kimberley.
The tariff threat also throws a wrench into the plans to renegotiate NAFTA into the USMCA deal. The new free trade agreement was supposed to be ratified by Mexico soon, but with this in play, experts worry that it will delay the signing.