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U.S.-Mexico dairy trade generates billions in economic activity

Staff Writer | February 28, 2018
The current free trade agreement with Mexico is the driving force behind $1.2 billion in U.S. dairy exports to our southern neighbor, as well as billions more in economic contributions, according to an analysis by Informa Economics.
dairy trade
Food trade   Mexico is the No. 1 market for U.S. dairy
Mexico is the No. 1 market for U.S. dairy product exports, accounting for roughly one-fourth of total U.S. exports. In 2016, the most recent year examined by Informa, the United States shipped $1.2 billion worth of dairy products to Mexico, up from $201 million in 2002.

dairy tradeIn 2016, Mexico accounted for 45 percent of total U.S. skim milk powder exports to all destinations, as well as 30 percent of cheese exports, 10 percent of butter exports and 8 percent of whey exports.

According to the analysis, total economic contributions (direct, indirect and induced) created by dairy sales to Mexico show the true importance of these exports to the overall U.S. economy.

Including impacts to industries that are linked to U.S. dairy exports to Mexico, the aggregate 2012-2016 output value of $6.7 billion is magnified to $23.3 billion in economic output.

Informa's analysis found that for every $1 of sales associated with dairy exports to Mexico, an additional $2.50 in output (industry sales) is supported elsewhere in the U.S. economy. U.S. dairy exports to Mexico also created 16,492 full-time equivalent jobs while directly generating an aggregate GDP of $8.4 billion over that five-year period.

The authors of the analysis note that under NAFTA, U.S. exports of dairy products to Mexico are duty free. This provides a significant advantage to the United States because export competitors shipping to Mexico are subject to MFN tariff rates of 20-45 percent on cheese, 45 percent on skim milk powder and 10 percent on whey products.

Some competitors, including the European Union (EU), are already negotiating trade agreements with Mexico that could make their exports more competitive in the Mexican market.


 

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