From the August/September 2024 issue of Vision Magazine North America
Elections matter for your businesses in the produce industry. The Fresh Produce Association of the Americas (FPAA) continues to track both the recent Mexican election, as well as the upcoming U.S. elections.
With the presidential election in Mexico on June 2 overwhelmingly supporting Morena’s Claudia Sheinbaum, prognosticators are trying to ascertain how the country will work with the business sector.
Sheinbaum is a former scientist who became mayor of Mexico City, and she is seen as more pragmatic than current President Andrés Manuel López Obrador. However, she shares many of the same ideological underpinnings as her predecessor.
According to some experts, before Sheinbaum is officially installed in office, López Obrador’s “lame duck” period actually could be active. He will have the advantage of a near super-majority in the legislature, after the new legislators take office. This means he may be able to enact even more changes to the government before Sheinbaum becomes president on Oct. 1.
After Sheinbaum takes office, it is not obvious how the ruling coalition will stick together, given the outsize impact of López Obrador’s personality on the Morena movement. Overall, it is expected that the next government will be more technical and organized than the current administration.
Sheinbaum announced the core of her cabinet in June, which is much earlier than normal, said Ken Smith Ramos, an expert on trade who recently offered some analysis of the outcome of the election. Working for Mexico’s Ministry of the Economy, Smith was one of the chief architects of the original North American Free Trade Agreement (NAFTA), and he continues to be a great resource on trade and geopolitics.
Among Sheinbaum’s first announced cabinet appointments is former Foreign Affairs Secretary Marcelo Ebrard, who played a role in getting the United States-Mexico-Canada Agreement (USMCA), which has replaced NAFTA, across the finish line. Ebrard has been tapped as Secretary of the Economy.
Nonetheless, populist pressures will continue to impact the direction of both the Mexican and U.S. governments. Indeed, in the US-Mexico relationship, there are some sticking points.
Security at the border is driving the national political conversation in the United States. There is also scrutiny of recent Chinese investment in Mexico, especially after the U.S. near-shoring program began enticing factories back to North America, including Mexico. In agriculture, the U.S. has filed a challenge under USMCA to Mexico’s executive decree that would ban genetically modified (GM) corn. Mexico has put that ban on hold while the agriculture agencies attempt to identify other effective crop treatments, and it is not likely the market will provide an alternative to glyphosate—a widely used herbicide—in the short term.
Several changes to Mexico’s constitution may be up for a vote after September, but it is not expected that GM corn will be among those items.
On the U.S. side of the equation, we are now really gearing up for elections. Candidate Donald Trump has floated various ideas about instituting tariffs. He has suggested a blanket 10% tariff on all items, and he has even suggested supporting most government spending with tariffs. Meanwhile, the Biden Administration recently increased tariffs to 100% for Chinese electric vehicles made in Mexico.
The USMCA has some protections against either the U.S. or Canada unilaterally raising tariffs, according to Smith. Nonetheless, the USMCA is up for review in 2026, which means that whoever is the U.S. President, there are likely to be issues between Mexico and the U.S. that could impact your business, whether directly or indirectly. Politically, the jockeying for positions ahead of the 2026 USMCA review will begin in 2025.
Earlier in Sheinbaum’s life, as a student at California’s Lawrence Berkeley National Laboratory, she protested against the original NAFTA. It does not seem Sheinbaum clings to such ideas anymore.
Overall, the Mexican populace seems to be receptive to trade — way more than in the past. A recent poll in Mexico found 75% support the continuance of USMCA, compared to only about 30% who approved of the original NAFTA at the time, Smith noted.
In the U.S. media, trade has become a political piñata, getting whacked by both parties.
In reality, the populace has a mixed view on trade. Americans of both parties support the benefits of international trade, but they are nonetheless in favor of trade restrictions, according to the September 2023 Chicago Council Survey, which found that:
74% of Americans said trade is good for the U.S. economy.
82% said trade is good for consumers like themselves.
63% said trade is good for creating jobs in the United States.
Yet populist fervor is taking hold. The survey found that 66% are in favor of restrictions on imported foreign goods to protect American jobs, while only 32% responded that the U.S. should have no restrictions on trade so that American consumers have the most choices and lowest prices.
One thing is for certain, in your business, it is important to stick together with like-minded companies. FPAA’s major goal is maintaining fair and efficient market access for the fresh fruits and vegetables that you distribute. That remains our job No. 1, and we appreciate your participation in the association, making this work possible.
- The FPAA is a non-profit organization advocating for opportunities for importers, distributors and marketers of fresh fruits and vegetables from Mexico in the United States. It will host the SouthWest International Produce Expo (SWIPE) in Tucson, AZ, dedicated to Mexican fresh produce, on Nov. 7-9, 2024. Find more information at www.swipeexpo.com.