USMCA contributes to stabilizing food prices and North American agricultural supply chains

North American trade and food costs

Research on household food costs

A study conducted by Purdue University shows that North American trade agreements, currently maintained through the USMCA, have saved U.S. households about $700 per year on food expenditures, equivalent to about 7% of total food budgets. This result reflects the increasingly important role of agricultural trade in managing living costs and ensuring a stable food supply. According to the research team's data, for every 1% reduction in food tariffs, consumer food prices tend to drop by an average of 2.8% over 10 years. Conversely, if trade preferences under the USMCA are not maintained, tariffs could increase by an average of 7.4%, largely eliminating the price benefits consumers currently enjoy.

For the agricultural sector, the USMCA not only facilitates the movement of goods but also improves the efficiency of cross-border supply chains. Key agricultural products such as corn, wheat, soybeans, pork and beef can be traded more easily between the United States, Mexico and Canada, helping maintain stable supplies and ease price pressures in the market. The report also shows that low-income households benefit most from keeping food prices affordable, as food spending accounts for a large share of their household budgets. Meanwhile, agricultural producers benefit from access to larger markets and a closely integrated logistics network across North America.

The USMCA entered into force in 2020 and is currently entering its mid-term review process. Discussions between the United States, Mexico, and Canada are expected to focus on multiple sectors, including agriculture and food trade. Experts believe that maintaining a stable trade environment will be crucial for both consumers and agricultural production in the region. Amid food inflation being a concern for many countries, research findings from Purdue University show that agricultural trade agreements not only boost exports but also contribute to stabilizing prices, securing supplies, and enhancing the resilience of food supply chains against global economic fluctuations.