Cows graze on a dairy farmin Porterville in California's Central Valley. Robyn Beck | AFP | Getty Images

Despite gains from the new NAFTA deal with Mexico and Canada, it falls short in reaching "more ambitious goals" of certain agribusiness sectors, a CoBank report said Friday. According to CoBank, the newly minted United States-Mexico-Canada Agreement, or USMCA, looks in many respects "very similar to the old one. It will lead to significant change in the auto industry, but changes to other industries will be marginal, including agriculture." Among the changes in the modernized North American Free Trade Agreement are that the U.S. will get additional access to Canada's dairy market, going to about 3.6 percent market access from roughly 1 percent. Also, a controversial milk pricing class in Canada will be eliminated, which CoBank said "should level the playing field" more for U.S. producers and allow some to regain lost market share. U.S. wine producers also stand to get more access to Canada under USMCA along with the poultry and egg sectors. Mexico started to warm trade ties with Argentina and Brazil during the trade dispute, so the new agreement is seen as good news for producers of American farm commodities that compete with Brazil and Argentina, including U.S. grains and livestock products. "Each agricultural sector will interpret USMCA differently," the bank's report said. "To some, it is a significant step forward and to others it is akin to preservation of the status quo."

'Modest benefits' of new deal

The bank said "modest benefits that U.S. agriculture will gain from USMCA, however, will continue to be overshadowed by the remaining retaliatory tariffs imposed by Mexico and Canada." In March, President Donald Trump rolled out tariffs on imported steel and aluminum and initially exempted some allies but then in late May lifted the exemption for Canada and Mexico. That led to new retaliatory tariffs of up to 25 percent from some allies.

"The big thing that's missing is addressing the retaliatory tariffs," said Daniel Kowalski, an economist and vice president of CoBank's Knowledge Exchange division. He said there are still tariffs both in Mexico and Canada that are in "[agricultural or food] markets that are large and have been grown over the course of years and decades." There's a 20 percent retaliatory tariff on U.S. pork going into Mexico and a 25 percent tariff on some dairy products, including cheeses. Mexico was the largest volume market last year for U.S. hog producers and the No. 1 destination for U.S. cheese. In July, Canada imposed tit-for-tat tariffs on a wide variety of American products in response to the steel duties, including 10 percent surtaxes on U.S. prepared beef products. The U.S. exported about $800 million in beef to Canada last year and the tariffs on processed beef were about 20 percent of the total value.

Risk of losing ground