Tariff reductions under North American trade agreements have helped lower food prices by approximately $700 per year, about 7% of total household food expenditures. For families feeling the weight of food costs, this new Purdue University study shows how North American trade lowers U.S. food prices and could play a key role in keeping grocery affordability in check.
The study, USMCA Affordability Study: Effect of North American Trade on U.S. Food Prices, was commissioned by the Corn Refiners Association in partnership with the Agricultural Coalition for USMCA. The findings show how food affordability benefits lower-income households that spend a greater share of their income on food and are often the most vulnerable to rising grocery costs.
The study found every 1% reduction in tariffs on food products corresponded with an average 2.8% decrease in consumer food prices over a decade. Researchers warn that without the U.S.-Mexico-Canada Agreement (USMCA), tariffs could rise by an average of 7.4% above current levels, effectively eliminating those consumer food-cost savings within 10 years.
“Food affordability remains one of the top concerns for American families, and this study makes clear that USMCA is part of the solution,” says John Bode, president and CEO of the Corn Refiners Association. “By strengthening agricultural supply chains, expanding market access and reducing unnecessary costs, USMCA has helped provide consumers with year-round access to a wider variety of affordable food products. As the joint review approaches, maintaining a strong USMCA is critical for U.S. households, farmers, food manufacturers and rural communities.”
North American trade agreements also support year-round availability of certain products, expanded consumer choice and have helped develop U.S. markets for products that can only be produced seasonally in the U.S., the study shows.
“USMCA supports consumers, producers and strong North American food supply chains,” says Bryan Goodman, a spokesperson for the Agricultural Coalition for USMCA. “Preserving this trilateral agreement is essential to keeping food affordable and supply chains strong across the U.S., Mexico and Canada.”
Food inflation remains a leading economic concern for American consumers and as policymakers prepare for the USMCA review process.
“The evidence assembled in this report makes clear that the food tariff preferences embedded in USMCA have delivered, and continue to deliver, substantial and measurable consumer benefits,” the study explains. You can access the full study here.
Advocacy groups across sectors say to be globally competitive, continuing the efficient and seamless integration between the Mexico, Canada and the U.S. is crucial.
“Without this trade agreement, North America is more vulnerable to countries that employ trade-restrictive policies that negatively impact the movement of food from areas of surplus to deficit,” wrote a group of nearly 160 organizations representing the American, Canadian and Mexican food and agricultural value chains in a letter to trade representatives on June 1.
They urged them to renew and strengthen the USMCA as the required six-year joint review approaches.
“[USMCA] is key to maintaining a competitive global advantage that reduces reliance on distant supply chains and encourages investment across the region,” the letter said.
