North American trade deal lowers grocery costs, study finds

Trade agreements within North America have significantly lowered food prices for consumers, according to new research from Purdue University. The study, funded by the Corn Refiners Association, quantified the impact of the North American Free Trade Agreement (NAFTA) and the United States-Mexico-Canada Agreement (USMCA). Purdue professor of agricultural economics and study co-author Dr. Joseph Balagtas discussed the findings on RealAg Radio with host Shaun Haney this week, as the three countries prepare for the joint review of the trilateral trade pact. The research shows that a one per cent tariff cut yields a 2.8 per cent drop in consumer prices over a decade. By 2014, two decades after NAFTA’s launch, overall U.S. food prices were 12 per cent lower than they would have been without it, saving the average household about $700 annually in today's dollars. Trade also lowered domestic costs for exported goods, such as beef and wheat, as expanded markets allowed industries to gain scale efficiencies. Looking ahead, Balagtas warns that unwinding the pact could trigger a symmetrical 12 per cent increase in food costs over the next 20 years. Because continental supply chains are three times more integrated today than in 1994, reverting to Most Favoured Nation tariffs—currently averaging around 7 per cent—would disproportionately burden lower-income families, he notes. Website: https://www.realagriculture.com/ Find us on our other social media platforms: X/Twitter:   / realagriculture   Instagram:   / realagriculture   Facebook:   / realagmedia