Tariffs raising concerns in New Mexico

ALBUQUERQUE — The nation’s trade fight has come to New Mexico’s dairy industry, which is watching prices for its products decline and purchase orders getting delayed or canceled.

And while cheese and whey are a big worry, there’s also concern about New Mexico’s steel and aluminum products, mattresses, cotton and salsa.

On the horizon is the threat to the state’s biggest nut export — the pecan — once farmers harvest this year’s crop and start selling it, said Jeff Witte, who heads the New Mexico Agriculture Department.

The largest market for U.S. pecans is China, especially popular for Chinese new year celebrations. Tariffs on the nut have gone from 7 percent to 47 percent, affecting the $426,000 worth of pecans New Mexico sells to China.

All told, more than $75.6 million worth of New Mexico’s exports to China, Mexico, Canada and the European Union are threatened by retaliatory tariffs those countries have levied against U.S. products, according to the U.S. Chamber of Commerce.

The tariffs are a response to those announced earlier this year by the Trump administration, which levied the charges on billions of dollars worth of goods.

“Our ag folks, if you talk to any of them, what we wanted and what we need is fair ... and equitable treatement on trade all across the commodities,” Witte said. “And that’s where we hope all this will come down. There may be some short-term pain (but) ... I hope it’s not that long.”

The biggest hit New Mexico is looking at is its exports of cheese to Mexico, according to figures from the state and the U.S. Chamber of Commerce.

New Mexico producers sent more than $13 million worth of cheese to its southern neighbor last year, with no tariff levied under the North American Free Trade Agreement. Now, the tariff on cheese is set at 20 to 25 percent as the trade pact undergoes renegotiation.

The impact on the average New Mexico dairy is estimated at a loss of $660,000 per year, the Dairy Producers of New Mexico says.

“Given the already low prices for milk, these are cash losses that will erode farm equity and, in all likelihood, place some farms at risk of economic failure,” according to Executive Director Beverly Idsinga.

When it comes to trade with Canada, mattresses are the biggest product targeted for tariffs at about $9 million worth.

The figures don’t list specific companies, but Tempur-Pedic operates one of the largest mattress plants in the world on Albuquerque’s West Side.

Randy Trask, manager of the Albuquerque Bernalillo County Trade Alliance, said New Mexico is not getting hit as hard as other states because U.S. trading partners are targeting areas that voted for Donald Trump or that are represented by senior Republican lawmakers who might be swayed by harm to their constituents.

But, he added, “If it progresses to an all-out trade war, which is apparently escalating globally, then it is inevitable it will start affecting more industry sectors. What people seem to forget is that with increases in tariffs, those are just taxes passed to the consumer.”

While the Trump administration has agreed to $12 billion in aid to farmers nationwide, Witte said it was too soon to know how much of that will be coming to New Mexico.

Idsinga noted that federal officials have said “farmers will not be made whole by the aid package."