With so much of the focus on the Chinese trade front, we seem to have to be reminded about the United States ? Mexico ? Canada Agreement (USMCA). The agreement was signed at the G20 summit, last year, but has yet to be ratified. So, where are we?
United States Agriculture Secretary Sonny Perdue says he feels the USMCA agreement will be ratified by the summer. House Speaker Nancy Pelosi (D-CA 12th) has said Democrats would like to see provisions to enforce labor and environmental concerns. Secretary Perdue had this to say.
Perdue says he and his counterparts in Mexico and Canada are working hard to get the deal ratified by their respective legislative bodies. When this happens, Secretary Perdue is confident the Trump Administration will lift metal tariffs against our USMCA partners. It was these tariffs that caused retaliatory measures against U.S. Ag products.
While this will be welcomed news for farmers, economists fear this won?t be enough to drive commodity prices back up. The problem facing the markets is increased production. In the last 60 years, soybean production has increased over 1,000%, while prices have dropped 50% when adjusted for inflation. Corn has seen production rise by over 400%, while prices have fallen 60%. This is according to USDA Chief Economist Rob Johansson. He says we need an increase in demand or a hit to production to drive the prices back up. Tariffs will not do the job.
