Northern ranchers call for the implementation of the USMCA
U.S. Agriculture Secretary Brooke Rollins announced a package of measures to combat the screwworm infestation that includes both good and bad news for the livestock sector.
The good news is that Rollins is committed to greater coordination with the Mexican government and the head of the Ministry of Agriculture, Fisheries and Food (SADER), Julio Berdegué, to combat the screwworm and oversee Mexican livestock; as well as to investing $21 million to renovate the sterile fly plant in Metapa, Chiapas, with a production of 60 to 100 million flies per week, in addition to the 100 million produced at the plant in Panama.
It will also begin construction of a new plant in Texas to disperse sterile flies along the northern border and pledges to continue scientific research for more efficient pest control.
The bad, or rather, terrible news is that the United States will not resume importing live Mexican cattle, which it suspended on May 11 and which, according to Juan Carlos Anaya, director of the Mexican Agricultural and Forestry Commission (GCMA), has caused Mexican cattle ranchers losses of more than $300 million due to a 65% drop in exports and an increase in meat prices in the United States.
Evidently, the winners in the north of the country, who are the most affected, are demanding the opening of exports from border states that are currently exempt from the screwworm plague because the cases that have been detected are in the south due to the illegal crossing of contaminated cattle.
What livestock farmers are demanding from the Mexican government is the implementation of the USMCA, which allows for regionalization in agricultural trade. In fact, Mexico currently allows the import of chicken from the United States from regions or states that are free of avian flu.
Mexico could demand that this clause be enforced and that the United States authorize the importation of livestock from screwworm-free northern states, or implement retaliatory measures and halt the importation of chicken due to avian flu.
Bilateral Agreement, while the USMCA is renegotiated
The problem is that President Claudia Sheinbaum doesn't want to take retaliatory measures against the United States, even though the tariffs openly violate the USMCA. She won't do so in the case of the screwworm either, so she will continue the path of negotiation.
What was surprising is that Sheinbaum opened the door to a bilateral agreement because what Trump wants are bilateral agreements with all the countries he imposed tariffs on, as was the case with the United Kingdom.
Sheinbaum spoke of an agreement that would address not only trade issues but also insecurity, migration, and of course fentanyl and fuel theft trafficking.
In fact, Marcelo Ebrard, the Secretary of Economy, traveled to Washington again to meet with Secretary of Commerce Howard Lutnick. Ebrard, who had said he would begin reviewing the USMCA in October, assured that he would seek an agreement with Lutnick that would allow preferential treatment for Mexico, although we shouldn't be subject to any tariffs because the USMCA is a Free Trade Agreement.
In October, he said, the evaluation will begin in Mexico and the United States for the renegotiation of the USMCA, which will take place between January and July 1, 2026, the date contemplated in the Treaty itself for its review.
Increased financial pressures due to rising crude oil prices
The continuation of the war between Iraq and Iran and the possibility that the United States could join the war at any moment are keeping stock markets around the world on edge.
This will also be reflected in the foreign exchange market with the dollar's return to above 19 pesos.
In Mexico's case, the rise in crude oil prices has had a positive impact due to increased revenue from our oil exports. However, it must be remembered that our exports are declining and that the long-awaited energy self-sufficiency is far from being achieved, with more than 60% of the gasoline we consume imported.
There will therefore be a negative impact on public finances, because President Sheinbaum does not want gasoline prices to rise above 24 pesos per liter, a price ceiling set outside of market conditions. This will entail increasing the consumer subsidy through the IEPS (Income Tax), which could affect the goal of reducing the public deficit to 3.59% of GDP this year.
Of course, it is still too early to determine the impact on public finances because it will depend on the duration of this conflict, on whether the war spreads to other oil-producing countries, which would further increase crude oil prices and generate greater inflationary pressures, and, in the case of Mexico, on gasoline price subsidies.
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