If you hadn’t already guessed it, US President Donald Trump is no fan of trade deals. While the US has largely driven globalisation over recent decades, Trump sees the massive trade deficits the US has with its largest trading partners as one of the greatest symptoms of a country losing its economic muscle.

The US had a $347bn trade deficit with China last year, for example.

His slogan “Make America Great Again” promised voters a return to the days when the US actually manufactured most of its goods, instead of exporting this process to countries where labour costs are much lower.

In his opening address as President, Trump lamented the “rusted-out factories scattered like tombstones across the landscape of our nation” and pledged to stimulate growth in US manufacturing once more. Trump believes renegotiating or reversing trade deals is central to this.

Since taking office in January 2017, Trump has tasked his trade secretary Robert Lightizer with renegotiating the North Atlantic Free Trade Agreement (NAFTA) signed between the US, Canada and Mexico in 1994.

In Trump’s eyes, NAFTA in its current form has resulted in the $64bn trade deficit the US has with Mexico, as well as facilitating the shift of manufacturing jobs south of the border to Mexico, where wages are nine times lower than the US.

Aside from NAFTA, Trump signed an order within his first month in the White House to withdraw the US from the Trans-Pacific Partnership (TPP). The TPP trade agreement had been hammered out over the course of the Obama administration between the US and 11 other countries including Australia, Canada, Japan, Mexico, New Zealand and Vietnam.

Trump’s decision to pull the US out of TPP also had the knock-on effect of placing trade talks between the US and EU over the Transatlantic Trade and Investment Partnership (TTIP) into deep freeze. Following four rounds of TTIP negotiations between them in 2016, there hasn’t been a single meeting this year.

Impact on US agriculture

The unusual thing about Trump’s stance on global trade is that it has not been positive for US farmers, even though winning the vote of rural Americans was pivotal to his victory.

Speaking to a number of US dairy processors over the last month, there was a clear sense of regret around the loss of the TPP deal. One industry executive described the TPP agreement as having “a lot of wins” for US dairy exports, with greater access to Japan and Vietnam looking especially promising.

TPP aside, the NAFTA renegotiation is particularly worrying for the US dairy industry. Mexico is a critical market for US dairy exports, taking 90,000t of cheese and 250,000t of skim milk powder (SMP) every year.

While it’s still early days, dairy traders in the US have told the Irish Farmers Journal that buyers in Mexico have already started making enquiries to European processors should trading arrangements with the US suddenly change. Mexican buyers are looking to hedge their bets when it comes to future sourcing of cheese and SMP.

Insular

At the same time as America is becoming more insular in terms of the global trade picture, US dairy processors are watching on as the EU wraps up significant trade agreements with Vietnam, Japan and Canada. These are all markets that have been traditional strongholds for the US over the years, but US dairy exporters will now face competition from European processors with more favourable access.

However, dairy industry officials in the US say they were much more concerned to see EU Commissioner for Trade Cecilia Malmström visiting Mexico earlier this year.

The EU and Mexico have started talks around a new free trade agreement with Malmström grabbing attention in US dairy circles when she stated she hoped a deal might be possible by the end of this year. While a deal being completed in 2017 seems unlikely at this stage, US dairy exporters remain on edge.

Trump has declared the overriding issue for the US in the NAFTA negotiations is to reduce the $64bn trade deficit with Mexico. But, at the same time the world’s largest dairy producing bloc is making moves to gain free access to the US dairy industry’s most important export market. Maybe making America great again won’t be as simple as President Trump first thought.