A new study from Purdue University finds that the U.S -Mexico-Canada Agreement has helped lower U.S. food prices over the past six years.
The USMCA Affordability Study: Effect of North American Trade on U.S. Food Prices was commissioned by the Corn Refiners Association in partnership with the American Coalition for USMCA.
Joseph Balagtas, director of the Center for Food Demand Analysis and Sustainability, says tariff reductions have helped bring down consumer costs.
“For every one percentage point reduction in a food tariff, the annual growth of that food item was 0.6 percentage points lower in the same year,” he says. “That 12 percent price reduction amounts to a savings of about $700 a year today.”
Bernhard Dalheimer, ag economist at Purdue University, says keeping the USMCA intact would benefit the overall U.S. food supply chain.
“If we liberalize trade, or we keep USMCA, we will see efficiency gains and returns to scales in these industries that are domestic, and they certainly will translate into more growth and development,” he says.
But, he says an increased reliance on ag imports could contribute to price increases.
“We are importing five times as much as in the 1990s, so those cost effects are going to be higher,” he says. “The reality would probably be somewhere in between, from a 2 to 9 percentage point general CPI increase.”
Both say the elimination of the free trade agreement would limit year-round availability of certain ag goods, limit consumer choice, and increase the overall average cost of groceries per year.
A joint review of the USMCA is set for July 1st.
Balagtas and Dalhemier made their comments during a recent call with reporters.
