Proposed border tax could hit wide range of Mexican goods

A fence already separates the US and Mexico on the outskirts of Tijuana, in north-western Mexico. The country was the second-largest agricultural imports provider to the US in 2015, according to an official trade website.
A fence already separates the US and Mexico on the outskirts of Tijuana, in north-western Mexico. The country was the second-largest agricultural imports provider to the US in 2015, according to an official trade website.PHOTO: AGENCE FRANCE-PRESSE

WASHINGTON • The 20 per cent tax on imports floated by the administration of President Donald Trump would affect a wide range of agricultural goods.

Mexico was the United States' second-largest agricultural imports provider in 2015, according to the website for the Office of the US Trade Representative.

Data from the US Department of Agriculture said that Mexico exported US$21 billion (S$30 billion) worth of food and drink north of the border that year, reported Bloomberg.

Of this amount, US$4.84 billion was attributed to fresh vegetables, which included tomatoes, onions and chilli peppers.

That is more than four times what was purchased from Canada, the next biggest importer.

For fresh fruits, there were US$4.28 billion worth of shipments, including raspberries, strawberries and avocados.

Mexico sells more than twice as much fresh fruit to the United States as the country's No. 2 importer, Chile.

As for wine and beer, Mexico also led in this category, supplying US$2.7 billion worth to the US.

That is almost US$1 billion ahead of its biggest competitor, Italy.

For snack foods, Mexico is the No. 2 supplier to the US, with imports valued at US$1.72 billion.

Canada is the top supplier, selling roughly twice as much.

Despite running an overall trade deficit with Mexico, US food and drink exports to its southern neighbour do not lag far behind, at US$17.7 billion for 2015.

The US typically carries a trade surplus with its southern partner in years when grain and oilseed prices are high, as they were for most of the previous decade.

Mexico was the biggest buyer of US corn, soyabean meal, rice and dairy products in 2015.

That year was the first that the US had an agricultural trade deficit with Mexico since 1995.

Imposing a 20 per cent tax on imports from Mexico would violate the North American Free Trade Agreement and most likely the rules of the World Trade Organisation, which frowns on punitive levies imposed arbitrarily on imports from specific countries, reported The New York Times.

Experts also said that a 20 per cent tax on Mexican imports would affect US families deeply, restricting access to some basic goods by making them too expensive.

That is a sticking point for some lawmakers and consumer advocates, given that it would likely hurt low- and middle-income Americans more than it would affect wealthier consumers, reported CBS News.

Unlike certain industries such as vehicle makers, which could move to the United States to keep jobs local and boost the country's economy from within, agri- culture is most abundant when crops are planted in favourable conditions.

Certain climates lend themselves better to certain crops, so importing the goods is seen as a more efficient use of resources.

A version of this article appeared in the print edition of The Straits Times on January 28, 2017, with the headline 'Proposed border tax could hit wide range of Mexican goods'. Print Edition | Subscribe