The U.S. Is Dumping More Than Tariffs on Mexico

President Donald Trump arrives in office threatening to slap 25% tariffs on all imports from Mexico. If he carries through, it will amount to more than just a blatant violation of the free trade agreement he renegotiated with Mexico and Canada in 2018, but also complete a neoliberal hat trick of unfair trade policies by Washington. In December, the U.S. won its challenge to Mexico’s right to restrict the importation of genetically modified corn for its tortillas. Meanwhile, the U.S. has resumed exporting that corn at punishingly low prices. 

That last item is arguably the most devastating for Mexico, where, as the campesino slogan says, sin maíz no hay país (“without corn there is no country”). Corn remains at the center of the country’s diet and rural life, with some two-thirds of farmers growing a rich array of corn varieties adapted over millennia to the country’s diverse cultures and landscapes. According to recent data, the U.S. is currently exporting corn to Mexico at prices 14% lower than what it costs to produce and transport it. That is an unfair trade practice known as “agricultural dumping,” and it severely undermines local farmers’ ability to earn a living from their corn. 

Unlike Trump’s threatened tariffs, dumping corn on Mexico is entirely legal under the U.S.-Mexico-Canada trade agreement. The new wave of dumping resumes a devastating trend that began with the 1994 enactment of the USMCA’s predecessor, the North American Free Trade Agreement. The treaty outlawed tariff protections for Mexican farmers, prompting a flood of corn and other agricultural exports from the U.S. In most years, those crops were dumped on Mexico at very low prices. The pandemic-era uptick in commodity prices raised hopes in rural Mexican communities battered by “free trade” and hollowed out by migration. Former Mexican President Andrés Manuel López Obrador counted on higher prices to jump-start a rural economy that had languished amid unfair competition and government neglect.

But that bubble burst in mid-2023. Corn prices fell 31% between May 2023 and September 2024, cutting into farmers’ livelihoods just as drought was cutting yields. As it turned out, López Obrador faced U.S. corn dumping in four of his six years in office, undermining efforts to cut dependence on imports and increase domestic production. Cheap U.S. corn continues to drive down farmgate prices for Mexican farmers, making it hard to persuade them to invest in their land. President Claudia Sheinbaum took office in October equally committed to increasing Mexico’s corn production, but she faces the same bleak panorama of agricultural dumping — for corn, wheat, rice, soybeans and other commodities — as far into the future as economists’ projections foresee.

One definition of the unfair trade practice known as dumping is exporting a commodity at prices below what it costs to produce it. The more common definitions are when a country exports surplus goods at below their own domestic prices, or when a country exports to one country at prices significantly lower than it does to other countries. These are all unfair trade practices because they have the effect of undercutting domestic producers or other exporters to gain market share. 

U.S. agricultural policies are certainly responsible for dumping, but the causes extend well beyond farm subsidies. A broad range of farm policies encourage routine overproduction, and subsidies serve only to make up some of the losses for some farmers.

This dumping on Mexico is nothing new. In the decade following the passage of NAFTA in 1994, Mexico experienced a quintupling in U.S. corn imports, which arrived in Mexico at prices nearly one-fifth what it cost farmers to produce it. During the same period, Mexican farmers saw a decline of 66% in their own prices and incurred an estimated $6.6 billion in losses from dumping-suppressed revenues. Prices plunged for a wide range of crops — soybeans, wheat, cotton, rice — with the post-NAFTA surge in U.S. exports. After a brief upswing during the so-called food crisis starting in 2007, prices returned to their punishing levels. Between 2014 and 2020, U.S. corn entered Mexico at prices 10% below the cost of producing and transporting it for export. Last year, these suppressed prices are estimated to have cost Mexican corn farmers $3.8 billion. 

Not surprisingly, Mexico’s import dependency rose from 7% before NAFTA to 39% in 2018 when López Obrador took office. In late 2020, as the graph below shows, U.S. corn dumping paused as U.S. export prices skyrocketed above production costs amid the COVID-19 pandemic, a trend protracted by the Russia-Ukraine war’s impact on grain markets. But U.S. agricultural dumping is back, with a vengeance.

Our new estimates, using the same methodology developed by the Institute for Agriculture and Trade Policy, show that the U.S. resumed corn dumping in mid-2023 as global markets recovered, chronic overproduction resumed and the bottom fell out of prices. Prices fell nearly 40% by the end of the year compared to their peak in late 2022. It caught many Mexican farmers unprepared. Prices plunged in May 2023 just as Mexico’s biggest corn-producing state, Sinaloa, was beginning its harvest. Government programs to stabilize prices cushioned the blow for some small- and medium-scale farmers, but many growers took losses on their crops. With drought persisting across much of Mexico, some declined to plant corn last year. Since September of 2023, U.S. corn exports have been dragging down Mexican farm prices, coming in on average 14% below costs — a return to dumping by even wider margins than the last bout, between 2014 and 2020.

Economic projections show that dumping-level prices for corn and other U.S. agricultural exports will probably persist, returning to the baseline that has plagued agricultural commodity markets since the 1990s. According to the latest USDA forecasts, future prices for corn, soy, wheat and cotton are likely to stagnate near pre-pandemic levels into the next decade. Those are punishingly low prices for farmers and amount to unfair trade for importers of U.S. commodities.

That will continue to undermine Mexican farmers by suppressing crop prices and capturing markets for U.S. producers. As a result, Mexico’s domestic production will stagnate in a time of growing domestic demand — particularly demand for livestock feed — continuing a 30-year trend of U.S. imports steadily expanding their share of the Mexican market. Mexico, meanwhile, will only deepen its dependence on imported crops. Mexico remains largely self-sufficient in white and native corn for tortillas and other staple foods. But overall domestic production has stagnated while imports grow to meet rising demand for animal feed. Since the implementation of NAFTA, import dependence grew from 10% to 75% for wheat and from 35% to 80% for rice.

López Obrador failed to reverse this trend, despite making food self-sufficiency a major policy goal. He guaranteed support prices to some producers to counteract the market pressure from low import prices, and he expanded the provision of free fertilizer and other forms of agricultural subsidies. But these measures were not sufficient to stimulate production in the face of cheap U.S. corn, particularly with drought conditions cutting into production over the past two years. With the exception of dairy, production has failed to respond to government incentives for corn, beans, wheat or rice.

Sheinbaum, who has expressed resolve to pursue her predecessor’s food self-sufficiency goals, will face a triple-threat of neoliberal trade: U.S. corn exports flowing freely into Mexico at dumping-level prices; a USMCA trade tribunal that recently sided with the U.S. in ruling that Mexico’s modest restrictions on genetically modified corn in tortillas constitute an unfair trade practice; and a U.S. president threatening 25% tariffs on all Mexican exports, a flagrant violation of the same trade agreement invoked last month to punish Mexico for daring to keep GM corn out of its precious tortillas.

In the GM corn dispute, the Mexican government defended its food sovereignty admirably, presenting a raft of scientific evidence that demonstrated the risks to public health and the environment from GM corn in a vulnerable population and ecosystem. It also took bold new initiatives to support small-scale food producers in a transition toward agroecology and more sustainable farming practices. 

With its nationalist and pro-farmer policies, Mexico is swimming against a strong neoliberal tide. As U.S. agricultural dumping continues to undermine the country’s food self-sufficiency, Mexico may well take the opportunity afforded by a mandated 2026 revision of the USMCA to demand relief for its beleaguered food producers. And don’t be surprised if Sheinbaum responds to Trump’s tariff tantrum with retaliatory measures of her own, including a 25% tariff on U.S. corn imports and a refusal to abandon her country’s restrictions on GM corn.