USMCA Not Shocking
From the Ag Information Network, I’m Bob Larson. The U.S. has declined to renew the U.S.-Mexico-Canada Agreement, the free trade agreement among the three North American countries.
But, according to Senior Commodities Economist Mike Castle of StoneX, the market wasn’t really surprised by the White House’s decision for several reasons …
CASTLE … “I think the fact that we've known that this is coming for a while, Trump has obviously been pretty clear that he is not a fan of this at this point, you know, kind of wants to stir the pot, for lack of a better term, it's kind of just his negotiating style. But I don't think the market's shocked to hear that we didn't, you know, get the automatic renewal today that, you know, would have extended things through, I believe, 2042.”
In reality, Castle says it takes time to walk away from this deal, including a decade of reviews …
CASTLE … “But now, like you mentioned, we're going into this annual review process. It's not like we can just walk away from this in one day, the market recognizes that. And I think another part of why the market isn't necessarily reacting to this news this week, is because we've seen Trump kind of have this back and forth with Canada and with Mexico separately. And then ultimately, what happens is you see a lot noise up front, but at the end of the day, ag products have remained exempt, because they need to.”
Castle says the U.S. and its North American neighbors have deep trade relationships, making any sort of rapid exit out of USMCA next to impossible.
