- REUTERS/Tomas Bravo
In the weeks after Trump’s election, as his hardline on trade relations and immigration remained firm, Mexico’s government appeared to outline how it could rebuke the US government should it install hostile policies.
“If they place on us a tax on Mexican exports,” Foreign Minister Luis Videgaray told the Chamber of Deputies in late February, according La Jornada, “we are going to put one on them, but better, because we are going to choose [those exports] which hurt them.”
His remarks came a few days after Economy Minister Ildefonso Guajardo said Mexico needed to prepare to immediately “take a fiscal action that clearly neutralizes” a potential US border tax.
Now a group of grassroots activists in the US legislators in Mexico are trying to push the US’s southern neighbor toward a specific target: corn.
“So a group of us, Mexican immigrants in Arizona, met after the inauguration to talk about what we can do to push back against Trump. We realized that here in Arizona we have lived through similar times” after SB 1070, the Arizona bill that imposed harsh immigration measures, said Daniel Rodriguez, founder of the group No Maiz Gringo.
- Reuters/Henry Romero
“Through some research we found that Mexico is a huge importer of American corn, and that the majority of that corn is exported from Midwestern states, such as Nebraska, Indiana, and, of course, Iowa – states who voted heavily in favor of President Trump,” Rodriguez said during a press call. “For that reason we agreed that a boycott against American corn would be the most politically and economically effective campaign that we could launch in response to Trump’s attacks.”
The group was able to pitch the idea to Mexican Sen. Armando Rios Piter, a member of the left-wing PRD representing the state of Guerrero who leads a congressional committee on foreign relations, who in February introduced a measure to “eliminate the dependence on corn imports from the United States.”
“I’m going to send a bill for the corn that we are buying in the Midwest and … change to Brazil or Argentina,” Rios, told CNN in mid-February. It’s a “good way to tell them that this hostile relationship has consequences, hope that it changes.”
US “corn producers may have been fooled by Donald Trump when he said that Mexico was the only one benefiting from NAFTA,” Rios told AFP. “Now that they see what is at stake, they will have to change their minds.”
“The idea is that, on one hand, Mexico would mobilize a coalition of US corn producers, as well as states like Iowa and Illinois, to lobby the Trump administration and Congress in favor of NAFTA,” Roberto Simon, lead political analyst for Latin America at FTI Consulting, told Business Insider.
“On the other, Mexico would start ‘looking more to the South’ and deepen its economic ties with the rest of Latin America – a decades-old (and largely unfulfilled) promise of Mexican diplomacy.”
- REUTERS/Henry Romero
For Mexico, corn, in everything from a simple tortilla to high-fructose syrup, is a resonant issue – particularly its origin and its price.
The country had long been a hearty producer of the staple good, but its output has steadily declined over the last two decades, as its purchases of corn from the US have risen dramatically – from $391 million in 1995 to $2.5 billion in 2015.
Others have pinned social and economic turmoil Mexico has seen over the last two decades on disruptions in the corn and agricultural markets related to NAFTA.
“As heavily subsidized US corn and other staples poured into Mexico, producer prices dropped and small farmers found themselves unable to make a living,” Laura Carlsen, director of the Americas program at the Center for International Policy, wrote in The New York Times in November. “Some two million have been forced to leave their farms since Nafta. At the same time, consumer food prices rose, notably the cost of the omnipresent tortilla.”
For No Maiz Gringo, the push to boycott US corn has two fronts, playing on both regional developments and social and economic weight around corn in Mexico.
- REUTERS/Henry Romero
“The first one is to identify other countries that could potentially sell corn to Mexico. Mexico has already sent a delegation to both Brazil and Argentina, two countries that have already expressed a willingness to sell corn to Mexico at a cheaper price than Mexico is currently getting from the United States,” Rodriguez, a lawyer in Arizona, told Business Insider during a press call.
“And second, part of the reason that we have received great support from the Mexican people behind this campaign is because an aim of this campaign is also to pressure Mexico to invest in Mexican production of corn. Mexico used to produce its own corn before the early 1990s.”
“It was after trade deals such as NAFTA and others that Mexico became more dependent on American exports,” he said.
Rios Piter’s bill has only been proposed, and the No Maiz Gringo campaign is still in its early days. But rumblings about cutting Mexican purchases of US corn – the US’s fourth-biggest seller south of the border – have struck a cord with American producers.
“At the end of the day, you drive across the state you’re going to see piles of corn dotted everywhere,” Lisa Richardson, of South Dakota Corn, told KSFY News in mid-February. “We have the largest carryover, 21.5 billion bushels of corn in this country, we simply need access to more markets, not less.”
- Jim Young/Reuters
“If we do indeed see a trade war where Mexico starts buying from Brazil … we’re going to see it affect the corn market and ripple out to the rest of the ag economy,” Darin Newsom, senior analyst at DTN, an agricultural management firm, told CNN last month.
Some American producers were doubtful Mexican buyers would eat the additional expense of buying elsewhere, but they were cautious about where things could go.
“We have built these relationships with buyers from Mexico for decades and they buy from the United States for a good reason because it’s a good buy right now and it is very competitive, and most buyers – we don’t think – will pay an extra – whatever it is, $10 a ton more – to buy from our competitors,” Thomas Sleight, president and CEO of the US Grains Council, told Fox Business in late February.
“But it is getting political and we all know strange things can happen.”
Other potential sellers are on board with a possible Mexican shift in corn buying.
- REUTERS/Adriano Machado
“Countries like Brazil and Argentina – which have recently pivoted to a much more open approach to trade, and are both big corn producers – obviously welcome this idea,” Simon, of FTI Consulting, told Business Insider.
In meeting after Trump’s inauguration, both Argentine President Mauricio Macri and his Brazilian counterpart, Michel Temer, “publicly spoke about the ‘need’ to deepen Mercosur’s ties with Mexico. Trump was not explicitly mentioned, but everybody understood the message,” Simon added.
Mexico is already in advanced talks with Argentina and Brazil, and Mexico is slated to start importing corn from Argentina this year. But US corn, at $198 a ton, is cheaper than Brazil’s $210-a-ton price or Argentina’s $217 price.
In Mexico City, however, political factors may preclude a wholesale shift toward new markets.
“The president and members of his cabinet believe that making retaliation threats against the US even before NAFTA talks begin would be counterproductive,” Simon said. “What we are seeing is a firm, but conciliatory tone combined with a wait-and-see approach – especially because the terms of the renegotiation are still unknown.”
The Mexican government is also sure to be wary of retaliatory tariffs on US goods or of shifting suppliers, both of which could negatively affect consumer prices at time of inflationary pressure in Mexico.
Such price hikes have “direct political consequences, such as the recent wave of protests caused by a spike in the price of gas, the ‘Gasolinazo,'” Simon said. “Peña Nieto will have to move very carefully.”