The future of Iowan agriculture is in limbo after the Mexican threat to ban corn imports from the United States.

The Trump administration has shared varying plans on United States removal from NAFTA, a trade agreement among the United States, Mexico and Canada. This would allow the United States to impose trade tariffs on products, including corn.

Upon hearing the news, Mexican officials have threatened to ban imports of corn from the United States if the tariffs are imposed.

“Mexico is our No. 1 export market for corn,” Chad Hart, associate professor of economics, said. “They buy about 25 percent of all the corn that we export out of the United State.”

Bruce Babcock, professor of economics, said the United States, especially the state of Iowa, produces more corn than can possibly be consumed by its population.

With a surplus of corn, prices would be inclined to drop.

“The price of corn, hogs and lots of other commodities will drop significantly,” Babcock said. “Land prices will drop, banks that are heavy on farm lending will suffer stress, and the economic vitality of America would suffer a hit.” 

Schmidt said farmers are already going through a rough patch as they are losing money and paying more for produce than they’re getting for their products. 

Farmers and other major companies that deal with Mexico could face future struggles due to the damage to Latin American relations.

A possible solution to this financial hardship is to begin trade relations with other countries, Steffen Schmidt, professor of political science, said.

But the prices of trade would still increase, as transportation plays a key role. Hart and Schmidt agreed that current trade with Mexico is carried out by train, an inexpensive mode of transportation.

In other proposed countries, ships or ocean vessels would have to be used, which would increase the price.

Both countries will face immediate economic hardship, Hart said. With Mexico’s plans to purchase corn from other countries, its sources would also be overseas.

So why would Mexico want to pay more for its corn than it would with U.S. tariffs? Schmidt said it’s a matter of pride.

“The Trump administration has done a tremendous amount of damage to the U.S. relations with many Latin American countries,” Schmidt said.

Mexicans are upset about the way that the Trump administration has treated Latin Americans in the United States and are looking for a way to express that, Schmidt said.

“It’s not just about the tariffs. It’s much bigger,” Schmidt said.

By opposing NAFTA and going back on a trade agreement, the U.S. reputation would be altered even further.

“The Trump administration is uneven, with Donald Trump saying one thing and a lot of the people in his administration saying something else,” Schmidt said. “So, it’s hard to predict which is going to prevail.”

Schmidt said rather than face these potential risks, NAFTA will likely be renegotiated rather than repealed.

“It’s a signal of bigger things to come,” Babcock added.