1. Trade, Tariffs, & the Ag Economy
June 8, 2019
Chad Hart
Associate Professor/Crop Marketing Specialist 1 1

2. Net Farm Income
Source: USDA

3. Farm Debt
Source: Federal Reserve

4. Why do U.S. farmers need export markets?
That’s where the customers are
That’s where the economic growth is
That’s where the consumption growth is
We produce surpluses
We only eat high on the hog
Exports are crucial to farm income

5. 96% of the world’s population lives outside the US
Source: CIA World Factbook

6. Population growth 2017 to 2050
Source: World Bank

9. Top ten US ag export markets, 2017
Canada & Mexico buy % of US ag exports
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

10. Top 10 ag exporting states, 2017
Source: USDA Economic Research Service, “State Export Data”

11. Value of Ag Trade
Source: USDA-FAS

12. U.S. Ag Exports
Source: USDA-FAS

13. Agricultural trade with Canada
NAFTA
Two-way trade up 395% since NAFTA
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

14. Agricultural trade with Mexico
NAFTA
Two-way trade up 577% since NAFTA
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

15. Tariffs A tax on imports
Used to reduce trade and protect domestic industries
Has both positive and negative impacts
Positive for domestic producers of the product with the tariff
Negative for domestic consumers of the product with the tariff
If specifically targeted against one country, then impacts are
Positive for that country’s consumers
Negative for that country’s producers 15 15

16. Example: China’s Soybean Tariff
Positive for China’s soybean producers and U.S. soybean consumers
Chinese soybean producers capture a higher price
U.S. soybean consumers capture a lower price
Negative for China’s soybean consumers and U.S. soybean producers
Chinese soybean consumers pay a higher price
U.S. soybean producers receive a lower price
Price effects are due to supply changes
Less U.S. soybeans imported by China
More U.S. soybeans left on domestic market 16 16

17. Tariffs are a Policy Tool
Can be used to:
Reduce trade deficits
Raise government funds
Protect specific industries
Serve as a bargaining chip in trade negotiations
They’re not new. We’ve had tariffs on many goods since the U.S. was founded.
Major shifts in U.S. tariffs in:
1789, 1790, 1792, 1816, 1824, 1828, 1832, 1833, 1842, 1846, 1857, 1861, 1872, 1875, 1883, 1890, 1894, 1897, 1909, 1913, 1921, 1922, 1930, 1934, 1947, 1962, 1974, 1979, 1984, 1988, 1994, 2002, 2009, 2018 17 17

18. 18 18

19. GATT General Agreement on Tariffs and Trade
A multilateral treaty, signed by 23 countries in 1947, to promote international trade
Was updated several times between 1947 and 1994, lowering trade barriers and including more countries in the agreement (reaching over 100 countries by 1972) 19 19

20. WTO World Trade Organization
Created in the GATT update in 1994 and serves as the formal global organization for trade rules
Currently has 164 country members
Helps administer trade agreements
Serves as a forum for trade negotiations and disputes
Provides technical trade assistance and training for developing regions 20 20

21. WTO Members
Source: WTO 21 21

22. Per Capita Trade Values
Source: WTO 22 22

23. Trade in Goods
Source: WTO 23 23

24. Trade in Services
Source: WTO 24 24

25. Recent Trade Disputes 2002: U.S. imposes tariffs on steel
Bush administration wanted to protect the U.S. steel industry from surges in steel imports
Several countries were exempt from the tariffs
Canada, Mexico, Argentina, and other developing countries
EU, Japan, South Korea, China, and Brazil challenged the tariffs in the WTO
WTO ruled against the steel tariffs, pointing out that steel imports in the U.S. had actually dropped between 2001 and 2002
U.S. removed the tariffs in 2003 25 25

26. Recent Trade Disputes 2009: U.S. imposes tariffs on Chinese tires
Obama administration wanted to protect the U.S. tire industry as it accused China of flooding the international markets with cheap tires
China retaliated with tariffs on U.S. chicken
The tariffs substantially reduced trade for the selected products
The tariffs were removed in 2012
However, the product markets didn’t recover to pre-tariff levels. 26 26

27. Beef Export Shifts
Source: USDA-FAS

28. Pork Export Shifts
Source: USDA-FAS

29. Sorghum Export Shifts
Source: USDA-FAS

30. Soybean Export Shifts
Source: USDA-FAS

31. Corn Export Shifts
Source: USDA-FAS

32. Wheat Export Shifts
Source: USDA-FAS

33. Rice Export Shifts
Source: USDA-FAS

34. Cotton Export Shifts
Source: USDA-FAS

35. Arable land

36. Want to provide feedback on my presentation. https://www. surveymonkey

37. Thank you for your time. Any questions. My web site: http://www2. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: