Politics

Texas Ranchers Face Blowback From Trump’s Plans For NAFTA

U.S. beef exports to Mexico have skyrocketed since the North American Free Trade Agreement phased out tariffs. Representatives of the cattle industry warn reopening the treaty would put those gains in jeopardy.

President Donald Trump says he’ll pull the United States out of NAFTA, unless Mexico agrees to revise the trade agreement in America’s favor. Mexican officials say their country will retaliate against any new trade restrictions. News 88.7 decided to speak with some people caught in the middle. So we visited the Houston Livestock Show and Rodeo, which just wrapped up.

Coleman Locke of Hungerford, Texas is president of J.D. Hudgins, Inc., a family ranch in business since 1908.

“Our family’s actually been in that location since 1839, which was three years after the Alamo and six years before Texas was a state,” Locke says.

Locke says Mexico has long been one of the most important foreign markets for J.D. Hudgins. The family ranch sells Brahman cattle south. Mexican ranchers breed them with their own stock, then sell the calves back to the U.S.

“Those feeder cattle that came into Texas are by and large owned by Texans or somebody here in the United States. So the profit on those animals will be made in this country,” Locke says. Feeder cattle are cattle raised to be slaughtered for beef. And the largest foreign buyer of Texas beef? Mexico. “Since NAFTA was created, the export for beef to Mexico has grown by 750 percent.”

To get a sense of why, we spoke with another rancher. Kelley Sullivan is co-owner of Santa Rosa Ranch. Sullivan’s family, too, has been in the beef industry for more than a century. Originally from Galveston, they now raise Brangus and UltraBlack cattle at locations in Houston County and Grimes County.

“The export market is very, very important to us, so we keep an eye on it, closely” Sullivan says. “Prior to, for example, NAFTA being passed, there was a 25 percent tariff on our beef.”

We asked both Sullivan and Locke if they were concerned about the potential for trade disputes between the U.S and Mexico to hurt their businesses.

“I personally, and I think most producers, do feel hopeful,” Sullivan says, “because what we do know is that President Trump is a businessman and understands the importance of having markets available for products.”

Locke agrees. “I’m confident that the Trump team will negotiate trade deals which will be beneficial to our beef industry,” he says, “and I feel confident that he will have our beef organizations at the bargaining table and will be taking advice from them.”

The National Cattlemen’s Beef Association is the industry’s lead trade organization and is in the thick of those talks.

“Quite frankly, we’re worried that if there are any significant changes that are made to NAFTA, it could jeopardize our ability to remain competitive,” says Kent Bacus, the group’s director of international trade.

Trump has already dealt beef producers a blow by pulling America out of the Trans-Pacific Partnership (TPP). The trade agreement would have lowered barriers to Japan, a market even more important to the industry than Mexico.

“Last year we sold $1.5 billion worth of U.S. beef to Japanese consumers, but we sold it with a 38.5 percent tariff taxed onto the end of it,” Bacus says. “Meanwhile our competitors, the Australians, have about a 10-11 percent tariff rate advantage over us, and as a result, we’ve been losing about $400,000 per day in potential sales. Well, TPP would have eliminated that gap on day one.”

Bacus is lobbying hard to make sure the administration understands what’s at stake with NAFTA, because if that trade agreement unravels, his members will be among the first hurt.

“Beef has traditionally been a target for many retaliatory efforts when it comes to trade,” he says, “and Mexico has made that threat before. We can’t take these threats lightly.”

The Commerce Department is expected to notify Congress shortly of the administration’s intent to renegotiate NAFTA. Once it does, talks will begin within 90 days.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas delegations in the U.S. House and Senate, as well as the Texas governorship, the state legislature, and county and city governments. Before taking up his current post, Andrew...

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