Trade conflicts have cost Nebraska economy more than $1 billion, Farm Bureau says

Trade conflicts have cost Nebraska economy more than $1 billion, Farm Bureau says
A soybean field outside Gresham, Nebraska. RYAN SODERLIN/THE WORLD-HERALD

WASHINGTON — Nebraska farmers have lost upward of a billion dollars in revenue from ongoing trade conflicts, according to a new report issued Monday by the Nebraska Farm Bureau.

The hit to agriculture from the ongoing tariff wars has been clear for some time, but the new report uses some eye-popping numbers to illustrate the pain.

“Retaliatory tariffs make our U.S. products more expensive for international customers, meaning they buy less or buy from someplace else,” Nebraska Farm Bureau President Steve Nelson said in a press release. “This report provides a clear picture of how much we’ve lost due to those tariffs and the need to improve our trade relations.”

President Donald Trump continues to tout the tariffs imposed, saying, in particular, that they have benefited American steel interests and rejecting the suggestion that they have contributed to problems for U.S. automakers.

The Farm Bureau report also did not account for Market Facilitation Payments — part of a $12 billion program intended to offset the loss of farm revenues as a result of trade disruptions. The first half of those payments are expected to equal about $300 million for Nebraska, according to the report.

U.S. trading partners such as Canada, Mexico and the European Union responded to Trump’s steel and aluminum tariffs with their own levies on American products — particularly those from the agricultural sector.

The farm bureau report borrowed work done in a previous Iowa State University study on the impact those retaliatory tariffs have had on the prices of various commodities. The report then used those ranges to produce estimates for the overall impact on Nebraska.

Corn, soybeans and pork have all taken a significant blow, according to the analysis by Jay Rempe, Nebraska Farm Bureau senior economist.

Those losses have been offset by robust U.S. beef exports. The major customers for U.S. beef like South Korea and Japan have not been subject to U.S. steel and aluminum tariffs and therefore have not implemented retaliatory tariffs.

“The total loss in Nebraska farm revenues due to the retaliatory tariffs ranges from $695 million to $1.026 billion so far in 2018,” said Rempe. “That’s roughly 11 to 16 percent of the export values of Nebraska agriculture goods in 2017.”

In terms of the broader Nebraska economy, the analysis says that when direct farm losses are combined with the state’s labor income losses, the total economic loss to the state of Nebraska from retaliatory tariffs climbs to between $859 million and $1.2 billion.

“To put a $1.2 billion loss into perspective, every person in the state of Nebraska would need to contribute $632 to cover that volume of lost dollars. That’s a significant hit to our state’s economy,” said Rempe.

The farm bureau is urging a series of steps to address the trade situation: approval of the agreement with Mexico and Canada that would replace NAFTA, joining the Trans Pacific Partnership, negotiating free-trade agreements with partners from Japan to the European Union and confronting China’s trade abuses with a multinational approach.

The organization is also calling for the elimination of the administration’s steel and aluminum tariffs. Not only do those result in retaliatory tariffs that hurt agriculture, it says, but they also raise prices for products needed to operate farms — from grain storage facilities to machinery parts.

The bureau called for “continued and growing access to world markets for commodities and products produced by Nebraska farm and ranch families.”

It remains to be seen how trade issues will play out in 2019, however. Midwestern lawmakers, including those from Nebraska and Iowa, have complained loudly and often about the trade situation and its effect on farm country.

Sen. Chuck Grassley, R-Iowa, the incoming chairman of the Finance Committee, has signaled he’s open to legislation aimed at pulling back on the tariffs. But it’s far from clear whether there would be enough votes to push such a measure to the finish line, particularly if President Trump objects to it.

China and the United States just announced something of a truce — a three-month cease-fire in the back-and-forth — but the longstanding trade issues between the two countries are so complex that they still could take years to resolve.

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