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Local farmers could be victim of possible trade war with Mexico

MARSHALL — Agriculture economists predict a potential tariff on Mexican exports could trigger a trade war with Mexico that would have a major effect on the farm economy in southwest Minnesota.

“If we get in a trade war with Mexico, farmers are going to learn that they’re on the front line of that war,” University of Minnesota grain marketing economist Ed Usset said in an Associated Press interview.

Joel Wiering, CHS, Inc. manager in Ruthton, said that a tariff could potentially have an effect on local farmers, depending on the size of it. CHS Inc. operates a farming cooperative system.

“The potential increase is about 20 percent on corn going into Mexico,” Wiering said in a telephone interview Monday. “Mexico is a big importer of U.S. corn.”

Wiering explained that corn from Iowa and Kansas tends to market southward, while North Dakota, South Dakota and Minnesota corn goes to the Pacific Northwest and from there, on barges to markets westward from there.

The tariff would add about a $1 per bushel to the price of the corn going to Mexico, which might convince them to buy cheaper grain from Brazil.

“If we lose our Mexican market, our corn will stay in the U.S.,” Wiering said.

These potential stockpiles in the U.S. could make the prices go down unless it can be sold somewhere else.

White House officials say the tariff is just one possible way President Donald Trump could finance the border wall he committed to during his campaign.

“The president was referring to the Border Adjustment Tax proposal contained within the blueprint for overall tax reform,” Minnesota Farm Bureau Federation Director of Public Policy Amber Hanson said by email over the weekend. “(The) Farm Bureau has not taken a position on the border adjustability proposal or the tax reform blueprint itself.”

“Mexico is an important trade partner,” Hanson said. “In fact, Mexico is the third largest market for agricultural exports. Mexico buys more Minnesota poultry and corn than any other country. Mexico is also the second top market for Minnesota soybeans and pork. It is critical to ensure that our discussions do not lead to trade repercussions that would have serious impacts on both the Minnesota and Mexican agricultural economies.”

Agriculture leaders are hoping that alternative funding for the impending border wall can be found so as not to affect the market standing with Mexico.

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