Popcorn and a Potential US-Mexico Trade War

Who would think that a trade war between the United States and Mexico could affect the popcorn you chomp on while watching a movie – especially if you were watching a movie in a theater in Mexico

Who would think that a trade war between the United States and Mexico could affect the popcorn you chomp on while watching a movie – especially if you were watching a movie in a theater in Mexico

Building a border wall, making Mexico pay and renegotiating NAFTA would certainly create winners and losers. Like popcorn producers.

What’s a great movie without a buttery barrel of popcorn. Money is no object, within limits. When the price gets too steep for kernels, people shut their wallets and movie house owners look for cheaper alternatives.

The world’s fourth largest movie theater chain owner says a trade war between the United States and Mexico could force his hand and cause him to change popcorn suppliers. Unfortunately, this won’t be a victory for who you think. The losers will be popcorn producers in Kansas, Missouri and Iowa because the movie chain owner is Alejandro Ramirez and his movie theaters are in Mexico.

That’s the tricky thing about international trade. It cuts both ways. Ramirez says just a 2 percent tariff on US-sourced popcorn would lead him to dump Heartland suppliers and start buying his popcorn from Argentina. The same goes, he adds, for the $40 million he spends annually in America for movie projectors and big screens and the $6.5 million for Wisconsin cheese.

Ramirez is not alone. US popcorn exports to Mexico total $2 billion per year.  That may not seem like much in the face of the $58 billion US trade deficit with Mexico in 2015. But it isn’t chump change either and shows that changing the rules on trade can have far-reaching and unforeseen consequences.

According to the US Trade Representative, Mexico is our country’s third largest trading partner with $531 billion in annual two-way trade. We export $236 million in goods to Mexico and import $295 billion. Trying to limit what we import through tariffs could wind up cutting what we export. And there is no guarantee of a net US job gain in a trade war with Mexico. Ironically, what could happen is the loss of more American jobs – for example, in the popcorn business.