On Monday, President Trump announced that the United States and Mexico had reached an agreement on renegotiating NAFTA, the three-way deal signed in 1992 between Mexico, the U.S. and Canada.
This deal would reopen agricultural exports to Mexico, especially helping U.S. hog and dairy farmers who sell heavily to Mexican consumers. On the news, milk prices spurted to a nine-month high; almost one third of U.S. cheese exports are sold to Mexico.
Despite the progress between the U.S. and Mexico, Canada has not agreed to the new terms, setting up a complication for the future of NAFTA.
President Trump and Mexican President Enrique Peña Nieto had set a deadline of Friday night for Canada to join the new deal. This would allow the U.S. Senate to ratify the treaty before President Nieto is replaced by the left-leaning Mexican President-elect Andrés Manuel López Obrador.
Without Canada’s agreement, the deal is only half-done, which could force negotiations with a new Mexican leader, potentially spoiling the current agreement.
For U.S. dairy farmers, a trade deal is much needed, as the $12 billion bailout from the USDA has been a sour deal for them, with under 1% of the funding coming their way, which amounts to about a penny per gallon, about 10% of the losses they’ve suffered this year.