Decades of free trade agreements have led to a record $39 billion agricultural trade deficit in 2024, undermining the broader U.S. agricultural industry.
NAFTA and USMCA have caused the largest agricultural trade deficits, standing at $18.8 billion with Mexico and $12.5 billion with Canada.
Trade policies have prioritized marginal export gains for grains and oilseeds, while sacrificing the competitiveness of nearly all other agricultural products, including livestock/meat, vegetables, fruits, food products, and more.
Trade agreements with countries like Chile, Australia, Peru, and more have also worsened agricultural trade deficits, echoing the harmful effects of NAFTA and USMCA.
Product-specific agreements like the Tomato Suspension Agreement with Mexico have also failed to curb import surges, highlighting the need for real protections in the form of tariffs and quotas.
One of the major pushes for additional free trade agreements throughout the past decades has been the argument that trade deals will boost U.S. exports (especially agricultural exports). Some economists argue that economic growth is stimulated by maximizing exports of high-yield agricultural products, such as grains and oilseeds (e.g., wheat, corn, soybeans). And to achieve this, the U.S. must sign free trade agreements with as many countries as possible to completely liberalize trade, and avoid at all costs any trade retaliations that would damage our agricultural corporations.
However, this strategy has failed to benefit the majority of U.S. agricultural producers. As shown in a recent study, the United States has reached a record agricultural trade deficit in 2024.
The blinded focus on a few major export products such as wheat, corn, soybeans, and cotton has completely undermined and devastated U.S. farmers across nearly all agricultural product categories, including meat/livestock, fruits, vegetables, and a range of other food products. And the primary cause behind this devastation to U.S. agriculture as a whole has been the continuous onslaught of free trade agreements, the ensuing import surges, and lack of protection for domestic farmers.
Uruguay Round of the GATT Negotiations
One of the major agricultural trade liberalizations over the past decades has been the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations. The agreements in these global trade talks went into effect in 1995 and mandated many reduced trade protections for agriculture, including requiring “the reduction of tariff equivalents and ordinary tariffs over six years (ten years for developing countries) by an average of 36 percent (24 percent for developing countries) with a 15 percent (10 percent for developing countries) minimum cut per tariff item.” [1]
As shown in Figure 1, the Uruguay Round was implemented at a relative high point for U.S. agriculture with the U.S. agricultural trade balance at $31 billion. However, as the agreement was implemented, the U.S. agricultural trade balance collapsed, falling to a mere $1.75 billion surplus by 2005.
FIGURE 1:
U.S. agriculture trade found a temporary respite when the 2008 financial crisis hit, and reset U.S. agriculture exports for years. The uniformly weaker dollar caused by the crisis made U.S. exports more competitive and imports more expensive. This offset the impact of slowing global growth and while magnifying the weakened import demand [2]. Over the next decade, agriculture’s trade balance declined again as the dollar recovered and the effects of continuing trade liberalization, as shown in Table 1, compounded. In total, these trends and policies have now pushed the U.S. agricultural trade deficit to a record $39 billion.
TABLE 1: List of Recent U.S. Free Trade Agreements
Free Trade Agreement
Year
Chile
2004
Australia
2005
Central America-Dominican Republic
2006
Oman
2006
Morocco
2009
Peru
2009
Colombia
2012
Panama
2012
South Korea
2012
USMCA
2020
NAFTA and USMCA Have Caused the Most Damage to U.S. Agriculture
One of the clearest failures of U.S. trade policy with agriculture has been with trade liberalization with Mexico and Canada, including both North American Free Trade Agreement (NAFTA) enacted in 1994 and the United States–Mexico–Canada Agreement (USMCA) enacted in 2020. These trade agreements have been continuously promoted as beneficial for U.S. agricultural trade and export growth.
However, the reality is that they failed to help the U.S.’s agricultural trade balance. They did not increase the U.S. agricultural trade surplus. In fact, the cumulative effects of NAFTA and USMCA led to a complete collapse in the U.S. agricultural trade deficits with both countries and the world as a whole.
As shown in Figure 2, NAFTA’s negative effect on the U.S.-Mexico agricultural trade balance was slow at first but then exponential. The agreement never helped the U.S. trade balance and eventually the lack of protections enabled Mexican producers to begin flooding the U.S. market and taking over market share for a wide range of products. In total, the U.S. went from a $1.6 billion trade surplus when NAFTA was implemented in 1994 to a $14.7 billion deficit by the time USMCA was enacted in 2020.
FIGURE 2:
NAFTA’s effect on the U.S.-Canada agricultural trade balance was more immediate. The U.S.’s trade balance with Canada went from a $200 million deficit in 1994 when NAFTA was enacted to a $2.2 billion deficit in 2001. When USMCA was implemented in 2020, the agricultural trade deficits only continued to worsen and reached record deficits for both countries.
The extensive trade liberalization with our two neighbors has made them the countries where the U.S. has the largest agricultural trade deficit of any country. As shown in Figure 3, in 2024, the U.S. is on track to reach a $18.8 billion agricultural trade deficit with Mexico and a $12.5 billion deficit with Canada. These agricultural deficits are nearly twice as much as the deficit for any other country in the world.
FIGURE 3:
The experience of NAFTA and USMCA is a good representation of what has happened to U.S. agricultural trade as a whole. As CPA’s recent agricultural study explores in-depth, the effect of U.S. trade policy over the past few decades has been to sacrifice nearly the entire U.S. agriculture sector for marginal gains in grain and oilseed exports.
Figure 4 shows the exact product breakout of the collapse in U.S. agricultural trade with Mexico and Canada. Even by 2002, the U.S. had a much more balanced agricultural trade with Mexico and Canada, with overall surpluses in grains and oilseeds, fruits and tree nuts, and food products. However, the long-term consequences show a complete collapse of the larger agricultural industry in favor of only grain and oilseed producers.
FIGURE 4:
NAFTA was successful for the grain and oilseed corporate interests, boosting the trade balance for those products by $6.4 billion since 2002. However, the cost has been opening up the entire U.S. agricultural market to surging imports. U.S. trade policy has been to sacrifice the majority of our agriculture product sectors for marginal increases in grain and oilseed exports. This has led to large and ballooning trade deficits for all other agricultural product categories and a more than $31 billion total agricultural trade deficit between Mexico and Canada.
Chile, Australia, and Peru Trade Agreements Echo NAFTA Effects
We also see the devasting impact of trade agreements on U.S. agriculture with non-North American countries. The U.S. has implemented numerous free trade deals with countries around the world in the past decades to liberalize trade even further than the Uruguay Round of the GATT negotiations did.
For example, the U.S. negotiated free trade agreements with Chile in 2004, Australia in 2005, and Peru in 2009. All these trade agreements have also led to a deteriorating agricultural trade situation. As shown in Figure 5, the U.S. agricultural trade deficit with these countries has worsened after each of the trade deals were implemented. Since the agreements were enacted, the agricultural trade deficit with Chile has increased by $1.35 billion, with Australia by $1.82 billion, and with Peru by $2.99 billion.
FIGURE 5:
The Costs Always Outweigh the Benefits
Marginal gains for certain countries have also been used to justify and mask broader agricultural trade losses. For example, some arguments for trade agreements have highlighted increased exports to countries like the Dominican Republic after the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) was implemented. However, these data points often just cherry pick the best examples and ignore the overall trend.
As shown in Figure 6, since the CAFTA-DR trade deal was implemented in 2006, the U.S. did see an increase in its agricultural trade surplus with certain countries. The U.S. agricultural trade surplus with the Dominican Republic increased by $202 million since 2006 and the surplus with El Salvador increased by $357 million. However, this ignores the larger trend. The CAFTA-DR trade agreement did not only include the Dominican Republic and El Salvador, it also includes Costa Rica, Guatemala, Nicaragua, and Honduras.
FIGURE 6:
While the trade balance with Dominican Republic and El Salvador saw marginal gains, the trade deficits with other countries exploded. The agricultural trade deficit with Costa Rica increased by $293 million, with Nicaragua by $603 million, and with Guatemala by $710 million. In total, the U.S. went from a $1.29 billion agricultural trade deficit with all CAFTA-DR countries in 2006 to a $2.25 billion deficit today.
Negotiated Product Agreements Also Do Not Work
In addition to the failings of full U.S. trade agreements, negotiated agreements for specific products have also not stemmed the import surge and trade balance collapse. A key example of this is the Tomato Suspension Agreement (TSA) with Mexico. The U.S. negotiated this agreement to try to protect the U.S. tomato market from imports by requiring “exporters sell Mexican tomatoes at or above the TSA reference price to eliminate the injurious effects of exports of fresh tomatoes to the United States.”
The agreement went into effect on September 19, 2019 and did nothing to curve imports because it has no mechanism to stop the import of tomatoes sold for less than the minimum floor. In order to control import volume or prices, you need to actually use quotas and/or tariffs.
The U.S. still has a 1.9 million ton trade deficit in tomatoes (the largest of any vegetable) and the majority of imports still come from Mexico. Moreover, as shown in Figure 7, Mexico’s share of total U.S. tomato imports has remained at about 90% since the agreement was signed, and total tomato imports from Mexico have actually increased by 252,000 tons (15%) since 2019.
FIGURE 7:
Conclusion
Free trade agreements have failed U.S. agriculture. Decades of misguided policies have prioritized liberalized trade over the survival of family farms and the broader agricultural sector. The evidence is overwhelming: while a few corporate interests in grains and oilseeds have seen marginal gains, the rest of the industry has been sacrificed. NAFTA, USMCA, and a slew of other trade deals have unleashed a flood of imports, led to consolidation in the agricultural sector, and left us with a staggering $39 billion agricultural trade deficit in 2024.
The promises of free trade are hollow. Instead of opening doors to new opportunities, these agreements have left American farmers vulnerable to foreign competition and eroded our food sovereignty. The U.S. can no longer afford to sell out its agriculture sector for the illusion of export-driven growth. It’s time to stop chasing trade agreements that enrich a few while devastating the many.
We need a bold pivot to policies that prioritize American farmers, enforce meaningful protections against import surges, and rebuild a balanced, resilient agricultural economy. Anything less is a betrayal of the hardworking men and women who feed this nation. The era of blind faith in free trade must end—our farmers deserve better, and so does America.
[1] INGCO, M. (1995). Agricultural Liberalization in the Uruguay Round. International Monetary Fund. https://www.elibrary.imf.org/downloadpdf/journals/022/0032/003/article-A012-en.pdf
[2] Outlook for U.S. Agricultural Trade. (2008). Foreign Agricultural Service. https://ucbiotech.org/biotech_info/PDFs/USDA_Econ_Res_Service_2008_Outlook_for_US_Ag_Trade_AES-59.pdf
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Free Trade Agreements Have Damaged U.S. Agricultural Trade Performance
KEY POINTS
One of the major pushes for additional free trade agreements throughout the past decades has been the argument that trade deals will boost U.S. exports (especially agricultural exports). Some economists argue that economic growth is stimulated by maximizing exports of high-yield agricultural products, such as grains and oilseeds (e.g., wheat, corn, soybeans). And to achieve this, the U.S. must sign free trade agreements with as many countries as possible to completely liberalize trade, and avoid at all costs any trade retaliations that would damage our agricultural corporations.
However, this strategy has failed to benefit the majority of U.S. agricultural producers. As shown in a recent study, the United States has reached a record agricultural trade deficit in 2024.
The blinded focus on a few major export products such as wheat, corn, soybeans, and cotton has completely undermined and devastated U.S. farmers across nearly all agricultural product categories, including meat/livestock, fruits, vegetables, and a range of other food products. And the primary cause behind this devastation to U.S. agriculture as a whole has been the continuous onslaught of free trade agreements, the ensuing import surges, and lack of protection for domestic farmers.
Uruguay Round of the GATT Negotiations
One of the major agricultural trade liberalizations over the past decades has been the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations. The agreements in these global trade talks went into effect in 1995 and mandated many reduced trade protections for agriculture, including requiring “the reduction of tariff equivalents and ordinary tariffs over six years (ten years for developing countries) by an average of 36 percent (24 percent for developing countries) with a 15 percent (10 percent for developing countries) minimum cut per tariff item.” [1]
As shown in Figure 1, the Uruguay Round was implemented at a relative high point for U.S. agriculture with the U.S. agricultural trade balance at $31 billion. However, as the agreement was implemented, the U.S. agricultural trade balance collapsed, falling to a mere $1.75 billion surplus by 2005.
FIGURE 1:
U.S. agriculture trade found a temporary respite when the 2008 financial crisis hit, and reset U.S. agriculture exports for years. The uniformly weaker dollar caused by the crisis made U.S. exports more competitive and imports more expensive. This offset the impact of slowing global growth and while magnifying the weakened import demand [2]. Over the next decade, agriculture’s trade balance declined again as the dollar recovered and the effects of continuing trade liberalization, as shown in Table 1, compounded. In total, these trends and policies have now pushed the U.S. agricultural trade deficit to a record $39 billion.
TABLE 1: List of Recent U.S. Free Trade Agreements
Free Trade Agreement
Year
Chile
2004
Australia
2005
Central America-Dominican Republic
2006
Oman
2006
Morocco
2009
Peru
2009
Colombia
2012
Panama
2012
South Korea
2012
USMCA
2020
NAFTA and USMCA Have Caused the Most Damage to U.S. Agriculture
One of the clearest failures of U.S. trade policy with agriculture has been with trade liberalization with Mexico and Canada, including both North American Free Trade Agreement (NAFTA) enacted in 1994 and the United States–Mexico–Canada Agreement (USMCA) enacted in 2020. These trade agreements have been continuously promoted as beneficial for U.S. agricultural trade and export growth.
However, the reality is that they failed to help the U.S.’s agricultural trade balance. They did not increase the U.S. agricultural trade surplus. In fact, the cumulative effects of NAFTA and USMCA led to a complete collapse in the U.S. agricultural trade deficits with both countries and the world as a whole.
As shown in Figure 2, NAFTA’s negative effect on the U.S.-Mexico agricultural trade balance was slow at first but then exponential. The agreement never helped the U.S. trade balance and eventually the lack of protections enabled Mexican producers to begin flooding the U.S. market and taking over market share for a wide range of products. In total, the U.S. went from a $1.6 billion trade surplus when NAFTA was implemented in 1994 to a $14.7 billion deficit by the time USMCA was enacted in 2020.
FIGURE 2:
NAFTA’s effect on the U.S.-Canada agricultural trade balance was more immediate. The U.S.’s trade balance with Canada went from a $200 million deficit in 1994 when NAFTA was enacted to a $2.2 billion deficit in 2001. When USMCA was implemented in 2020, the agricultural trade deficits only continued to worsen and reached record deficits for both countries.
The extensive trade liberalization with our two neighbors has made them the countries where the U.S. has the largest agricultural trade deficit of any country. As shown in Figure 3, in 2024, the U.S. is on track to reach a $18.8 billion agricultural trade deficit with Mexico and a $12.5 billion deficit with Canada. These agricultural deficits are nearly twice as much as the deficit for any other country in the world.
FIGURE 3:
The experience of NAFTA and USMCA is a good representation of what has happened to U.S. agricultural trade as a whole. As CPA’s recent agricultural study explores in-depth, the effect of U.S. trade policy over the past few decades has been to sacrifice nearly the entire U.S. agriculture sector for marginal gains in grain and oilseed exports.
Figure 4 shows the exact product breakout of the collapse in U.S. agricultural trade with Mexico and Canada. Even by 2002, the U.S. had a much more balanced agricultural trade with Mexico and Canada, with overall surpluses in grains and oilseeds, fruits and tree nuts, and food products. However, the long-term consequences show a complete collapse of the larger agricultural industry in favor of only grain and oilseed producers.
FIGURE 4:
NAFTA was successful for the grain and oilseed corporate interests, boosting the trade balance for those products by $6.4 billion since 2002. However, the cost has been opening up the entire U.S. agricultural market to surging imports. U.S. trade policy has been to sacrifice the majority of our agriculture product sectors for marginal increases in grain and oilseed exports. This has led to large and ballooning trade deficits for all other agricultural product categories and a more than $31 billion total agricultural trade deficit between Mexico and Canada.
Chile, Australia, and Peru Trade Agreements Echo NAFTA Effects
We also see the devasting impact of trade agreements on U.S. agriculture with non-North American countries. The U.S. has implemented numerous free trade deals with countries around the world in the past decades to liberalize trade even further than the Uruguay Round of the GATT negotiations did.
For example, the U.S. negotiated free trade agreements with Chile in 2004, Australia in 2005, and Peru in 2009. All these trade agreements have also led to a deteriorating agricultural trade situation. As shown in Figure 5, the U.S. agricultural trade deficit with these countries has worsened after each of the trade deals were implemented. Since the agreements were enacted, the agricultural trade deficit with Chile has increased by $1.35 billion, with Australia by $1.82 billion, and with Peru by $2.99 billion.
FIGURE 5:
The Costs Always Outweigh the Benefits
Marginal gains for certain countries have also been used to justify and mask broader agricultural trade losses. For example, some arguments for trade agreements have highlighted increased exports to countries like the Dominican Republic after the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) was implemented. However, these data points often just cherry pick the best examples and ignore the overall trend.
As shown in Figure 6, since the CAFTA-DR trade deal was implemented in 2006, the U.S. did see an increase in its agricultural trade surplus with certain countries. The U.S. agricultural trade surplus with the Dominican Republic increased by $202 million since 2006 and the surplus with El Salvador increased by $357 million. However, this ignores the larger trend. The CAFTA-DR trade agreement did not only include the Dominican Republic and El Salvador, it also includes Costa Rica, Guatemala, Nicaragua, and Honduras.
FIGURE 6:
While the trade balance with Dominican Republic and El Salvador saw marginal gains, the trade deficits with other countries exploded. The agricultural trade deficit with Costa Rica increased by $293 million, with Nicaragua by $603 million, and with Guatemala by $710 million. In total, the U.S. went from a $1.29 billion agricultural trade deficit with all CAFTA-DR countries in 2006 to a $2.25 billion deficit today.
Negotiated Product Agreements Also Do Not Work
In addition to the failings of full U.S. trade agreements, negotiated agreements for specific products have also not stemmed the import surge and trade balance collapse. A key example of this is the Tomato Suspension Agreement (TSA) with Mexico. The U.S. negotiated this agreement to try to protect the U.S. tomato market from imports by requiring “exporters sell Mexican tomatoes at or above the TSA reference price to eliminate the injurious effects of exports of fresh tomatoes to the United States.”
The agreement went into effect on September 19, 2019 and did nothing to curve imports because it has no mechanism to stop the import of tomatoes sold for less than the minimum floor. In order to control import volume or prices, you need to actually use quotas and/or tariffs.
The U.S. still has a 1.9 million ton trade deficit in tomatoes (the largest of any vegetable) and the majority of imports still come from Mexico. Moreover, as shown in Figure 7, Mexico’s share of total U.S. tomato imports has remained at about 90% since the agreement was signed, and total tomato imports from Mexico have actually increased by 252,000 tons (15%) since 2019.
FIGURE 7:
Conclusion
Free trade agreements have failed U.S. agriculture. Decades of misguided policies have prioritized liberalized trade over the survival of family farms and the broader agricultural sector. The evidence is overwhelming: while a few corporate interests in grains and oilseeds have seen marginal gains, the rest of the industry has been sacrificed. NAFTA, USMCA, and a slew of other trade deals have unleashed a flood of imports, led to consolidation in the agricultural sector, and left us with a staggering $39 billion agricultural trade deficit in 2024.
The promises of free trade are hollow. Instead of opening doors to new opportunities, these agreements have left American farmers vulnerable to foreign competition and eroded our food sovereignty. The U.S. can no longer afford to sell out its agriculture sector for the illusion of export-driven growth. It’s time to stop chasing trade agreements that enrich a few while devastating the many.
We need a bold pivot to policies that prioritize American farmers, enforce meaningful protections against import surges, and rebuild a balanced, resilient agricultural economy. Anything less is a betrayal of the hardworking men and women who feed this nation. The era of blind faith in free trade must end—our farmers deserve better, and so does America.
[1] INGCO, M. (1995). Agricultural Liberalization in the Uruguay Round. International Monetary Fund. https://www.elibrary.imf.org/downloadpdf/journals/022/0032/003/article-A012-en.pdf
[2] Outlook for U.S. Agricultural Trade. (2008). Foreign Agricultural Service. https://ucbiotech.org/biotech_info/PDFs/USDA_Econ_Res_Service_2008_Outlook_for_US_Ag_Trade_AES-59.pdf
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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