Lyle Schjodt performs a field check on an ear of corn on his farm outside of Blair, Neb. (Alyssa Schukar for the Washington Post)

In mid-May, President Trump sent a letter to Congress saying he will renegotiate the North American Free Trade Agreement (NAFTA) starting as early as August of this year. The letter was the first of many steps required to alter the 23-year-old agreement, which promotes free trade among the United States, Canada and Mexico. It came just weeks after Trump nearly withdrew from the agreement altogether.

For the agricultural industry, which relies on exports through NAFTA for nearly $40 billion of revenue, serious changes could prove devastating. In a field where products are essentially interchangeable — Argentinian corn works just as well as American — being able to offer cheaper products to consumers abroad via free trade agreements is vital to opening and keeping markets.

Destination of agricultural

exports, 2016

$10B

$5B

$1B

Exports in 2016:

Canada

China

$21B

$21B

Mexico

$17B

Destination of agricultural exports, 2016

$10B

$5B

Exports in 2016:

$1B

Netherlands

South

Korea

Canada

$21B

Japan

Mexico

China

$17B

$21B

Destination of agricultural exports, 2016

Exports in 2016:

$1B

$5B

$10B

Netherlands

Canada

$21B

South

Korea

China

Japan

$21B

Mexico

$17B

The production of many of those products is highly concentrated in the Midwest, placing the burden squarely on states that swung for Trump.

Production of major agricultural

NAFTA exports:

Corn

$3.26B

exported to NAFTA countries in 2015

= 10,000 Acres in 2012

About a third of Iowa’s economy is agriculture, much of it corn and soybeans.

Soybeans

$1.55B

exported to NAFTA countries

= 10,000 Acres

Dairy

$1.26B

exported to NAFTA countries

= 2,000 Milk Cows

Wisconsin is the epicenter of a dairy dispute between the U.S. and Canada.

Pork

$1.40B

exported to NAFTA countries

= 20,000 Hogs and Pigs

Production of major agricultural NAFTA exports:

Corn

Soybeans

$3.26B

$1.55B

exported to NAFTA countries in 2015

exported to NAFTA countries

= 10,000 Acres in 2012

= 10,000 Acres

About a third of Iowa’s economy is agriculture, much of it corn and soybeans.

Pork

Dairy

$1.26B

$1.40B

exported to NAFTA countries

exported to NAFTA countries

= 20,000 Hogs and Pigs

= 2,000 Milk Cows

Wisconsin is the epicenter of a dairy dispute between the U.S. and Canada.

Production of major agricultural NAFTA exports:

Corn

Soybeans

$3.26B

$1.55B

exported to NAFTA countries in 2015

exported to NAFTA countries

= 10,000 Acres in 2012

= 10,000 Acres

Soybean exports to China have spiked. Mexico is the second largest importer.

About a third of Iowa’s economy is agriculture, much of it corn.

Pork

Dairy

$1.26B

$1.40B

exported to NAFTA countries

exported to NAFTA countries

= 20,000 Hogs and Pigs

= 2,000 Milk Cows

Many farmers raise crops and pigs to insulate them from price changes.

Wisconsin is the epicenter of a dairy dispute between the U.S. and Canada.

There’s a huge amount of uncertainty around how Trump plans to change NAFTA, and it’s making farmers worry. In Trump’s letter to Congress, there weren’t any concrete negotiation goals listed.

Because the letter was scant on details, “at this moment we’re all going by speculation,” said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, a nonpartisan research institute. But the earlier draft version may provide some hints about what the administration is thinking. It included a number of negotiating points that could hurt, and help, agricultural exports.

WHAT THE DRAFT SAYS

“Seek rules of origin that ensure that the Agreement supports production and jobs”

IN PLAIN ENGLISH

Exports that qualify for free trade must have a higher percent of their contents originate within North America.

HOW IT COULD AFFECT FARMERS

For agricultural products that don’t meet that higher standard, farmers would either face higher tariffs, decreasing demand abroad, or they would have to buy more expensive supplies within North America to reach the threshold, cutting into their profits.

WHAT THE DRAFT SAYS

“Seek to level the playing field on tax treatment

IN PLAIN ENGLISH

De bolle speculated that this may refer to the controversial border-adjustment tax being pushed by some Republicans, though the administration has since backed away from the proposal.

HOW IT COULD AFFECT FARMERS

Under certain economic conditions, the tax could, like the rules of origin requirement, make farmers’ costs higher and profits lower.

WHAT THE DRAFT SAYS

“Seek to reduce or eliminate non-tariff barriers to U.S. agricultural exports”

IN PLAIN ENGLISH

This would eliminate standards, such as how much of certain chemicals can be present, that regulate what products can cross the border.

HOW IT COULD AFFECT FARMERS

This would allow more of the agricultural products produced in the United States to be exported.

“Seek rules of origin that ensure that the Agreement supports production and jobs”

WHAT THE DRAFT SAYS

Exports that qualify for free trade must have a higher percent of their contents originate within North America.

IN PLAIN ENGLISH

For agricultural products that don’t meet that higher standard, farmers would either face higher tariffs, decreasing demand abroad, or they would have to buy more expensive supplies within North America to reach the threshold, cutting into their profits.

HOW IT

COULD AFFECT

FARMERS

“Seek to level the playing field on tax treatment

WHAT THE DRAFT SAYS

IN PLAIN ENGLISH

De bolle speculated that this may refer to the controversial border-adjustment tax being pushed by some Republicans, though the administration has since backed away from the proposal.

HOW IT

COULD AFFECT

FARMERS

Under certain economic conditions, the tax could, like the rules of origin requirement, make farmers’ costs higher and profits lower.

“Seek to reduce or eliminate non-tariff barriers to U.S. agricultural exports”

WHAT THE DRAFT SAYS

This would eliminate standards, such as how much of certain chemicals can be present, that regulate what products can cross the border.

IN PLAIN ENGLISH

This would allow more of the agricultural products produced in the United States to be exported.

HOW IT

COULD AFFECT

FARMERS

“Seek rules of origin that ensure that the Agreement supports production and jobs”

“Seek to level the playing field on tax treatment

“Seek to reduce or eliminate non-tariff barriers to U.S. agricultural exports”

WHAT THE DRAFT SAYS

Exports that qualify for free trade must have a higher percent of their contents originate within North America.

De bolle speculated that this may refer to the controversial border-adjustment tax being pushed by some Republicans, though the administration has since backed away from the proposal.

This would eliminate standards, such as how much of certain chemicals can be present, that regulate what products can cross the border.

IN PLAIN ENGLISH

For agricultural products that don’t meet that higher standard, farmers would either face higher tariffs, decreasing demand abroad, or they would have to buy more expensive supplies within North America to reach the threshold, cutting into their profits.

Under certain economic conditions, the tax could, like the rules of origin requirement, make farmers’ costs higher and profits lower.

This would allow more of the agricultural products produced in the United States to be exported.

HOW IT

COULD AFFECT

FARMERS

Many of these requests are standard in free trade negotiation, according to de Bolle, and a major deviation from Trump’s “tearing up NAFTA” rhetoric on the campaign trail. If the president ultimately follows what’s written in the draft letter, de Bolle says, it’s unlikely Mexico or Canada would retaliate. But some experts, such as John Beghin, a professor of agricultural economics at North Carolina State University, see it as a possibility.

A previous trade dispute between the U.S. and Mexico, from 2009 to 2011, could give an idea of the impact retaliation could have today. Among the agricultural products Mexico targeted with retaliatory tariffs, there was a 22 percent decrease in agricultural exports, a study from the Applied Economic Perspectives and Policy journal found. And that loss was not made up with exports elsewhere — the products simply weren’t sold.

Perhaps more significantly, the study found that a 10 percent rise in the price of these products led to a 26 percent decrease in exports. In other words, the Mexican buyers were highly price sensitive and quick to seek out new suppliers.

Exports to Mexico of targeted

agricultural products

Retaliatory tariffs in effect

Projected exports

without tariffs

$200 million

Actual exports

with tariffs

March

2009

Oct.

2011

Dec.

2012

Jan.

2006

Exports to Mexico of targeted agricultural products

Retaliatory tariffs in effect

Projected exports

without retaliatory

tariffs

$200 million

$150

$100

Actual exports

with tariffs

$50

$0

Jan. 2006

March 2009

Oct. 2011

Dec. 2012

Whether price increases come from retaliatory tariffs or from negotiated changes to NAFTA, for a product like corn the impact could be significant. Corn, the leading U.S. crop export to Mexico at $27 billion, is already facing low selling prices and profit margins, so even a minor shrink would hurt. “It would be another economic stress at a time of lower prices,” said David Salmonsen, the senior director of congressional relations at the American Farm Bureau. Other crops are in similar circumstances.

Crop profit margins have been

falling

Iowa corn

+$4 per bushel

Profit

+$2

$0

-$0.29

–$2

LOSS

–$4

2006

2016

Iowa soybeans

+$4

+$2

$0

-$0.67

–$2

–$4

2006

2016

Kansas wheat

+$4

+$2

-$0.79

$0

–$2

–$4

2009

2016

Crop profit margins have been falling

Iowa corn

Iowa soybeans

Kansas wheat

+$4 per bushel

Profit

+$2

-$0.79

$0

-$0.29

-$0.67

–$2

LOSS

–$4

2006

2016

2006

2016

2009

2016

But even without formal retaliation, farmers may not get away scot free. “The perception of changes hurts the market,” said Mark Recker, a corn farmer in Arlington, Iowa, and the vice president of the Iowa Corn Growers Association. “Buyers in Mexico are talking to sellers in South America.” He continued: “Once you lose a market, it’s very difficult to get that market back. Food is national security to them, and we need to take it very seriously.”

The burden of price hikes or market loss would likely disproportionately fall on the very areas that supported Trump, with his “America First” agenda, according to de Bolle. Iowa, for instance, is the country’s top exporter of corn and soybeans — the two crops the U.S. sends most to Mexico — and voted for Trump by 10 points.

How corn-producing

areas voted in 2016

R+15

D+15

Tie

Lots of corn is produced in Iowa, a swing state that delivered big for Trump

The corn-producing region along the Mississippi River has a high African- American population.

How corn-producing areas voted in 2016

R+15

D+15

Tie

Lots of corn is produced in Iowa, a swing state that delivered big for Trump

WA

ND

ME

MT

MN

VT

OR

NH

Minneapolis

MI

MA

ID

SD

NY

WY

WI

CT

RI

Chicago

IA

PA

Des Moines

NE

NJ

Peoria

NV

OH

MD

IN

DE

IL

UT

WV

CO

CA

KS

VA

MO

KY

NC

TN

OK

AZ

SC

AR

NM

GA

AL

MS

LA

TX

FL

The corn-producing region along the Mississippi River has a high African- American population.

How corn-producing areas voted in 2016

R+15

D+15

Tie

Lots of corn is produced in Iowa, a swing state that delivered big for Trump

WA

ND

ME

MT

MN

WI

OR

VT

NH

Minneapolis

NY

MI

ID

SD

MA

La Crosse

WY

CT

RI

Chicago

PA

IA

Des Moines

NE

NJ

Peoria

NV

OH

DE

MD

IN

IL

UT

WV

CO

CA

KS

VA

MO

KY

NC

TN

OK

AZ

SC

AR

NM

GA

AL

MS

LA

TX

FL

The corn-producing region along the Mississippi River has a high African-American population.

But farmers — and the organizations that represent their interests — are mobilizing to push Trump’s renegotiation agenda in their favor. “We’re working with our senators and other organizations to let the administration know,” Recker said.

The administration has already acted on its protectionist trade leanings, voiding the Trans-Pacific Partnership (TPP) on its first full day in office. One study by American Farm Bureau economists estimated the TPP would have yielded an addition $4.4 billion in agricultural revenue.

Advocates hope this time will be different. “It’s up to us to explain why trade is important,” Recker said. “And I think they’re reacting to that message.”

Armand Emamdjomeh contributed to this graphic.

About this story

Crop and livestock production maps from the 2012 Agriculture Department Census of Agriculture (the most recent such census). Export dollar values and percentages from the MIT Observatory of Economic Complexity. Data for the 2009-2011 retaliatory tariff effect by the Applied Economic Perspectives and Policy journal. Crop price and profit margin data from the Farm Credit Administration. Certified election results compiled by The Post.

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