EconoFact: “Threats to U.S. Agriculture from U.S. Trade Policies”

Or, Does Mr. Trump feel lucky?

From EconoFact:

The agriculture sector in the United States depends upon exports for its vitality. Sales of U.S. agricultural products abroad are responsible for 20 percent of U.S. farm income, supporting more than one million American jobs on and off the farm, according to the U.S. Department of Agriculture. The three biggest buyers of American agricultural products are China, Canada, and Mexico. Yet trade with these three countries faces heightened uncertainty. The Trump Administration initiated a process of renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico, which includes the option of exiting the deal altogether. In addition, the United States has started a series of investigations of unfair practices leveled against China, some of which have already resulted in the imposition of new tariffs. These trade policy initiatives threaten agricultural exports both because of the potential increase of tariffs on exports to Canada and Mexico that would result from a withdrawal from NAFTA as well as the very real threat of retaliation in response to other proposed policies.


Figure 1: Share of total agricultural exports going to Mexico and Canada, by state. Agricultural exports defined as NAICS 111+112+311 (crops, livestock, and processed food). Source: Census via ITA and author’s calculations.

The entire article is here. More on agricultural sector fortunes here.

29 thoughts on “EconoFact: “Threats to U.S. Agriculture from U.S. Trade Policies”

  1. Moses Herzog

    If writing a good/solid blog post gives you 1 point, I’m giving Menzie 50 points just for the “Dirty Harry” reference. Well, Menzie, it’s hard to be a “civilized man” in these times, with the VSG. McConnell, Nunes, and the like. My Dad died in 2012, so I can’t turn to him for advice (if I ever got him to mumble something from behind a newspaper). But you know “what I reckon” my Dad would say?? “Endeavor to persevere!!!”
    https://www.youtube.com/watch?v=taYDeYxylzg

    Reply
      1. Moses Herzog

        Sunny was some nice eye-candy. I’d sign up for that. Better than Sandra Locke–PUKE. Eastwood has a sharp mind, but generally he sure had a thing for the skanky types didn’t he??

        Reply
  2. Ed Hanson

    From the “Summary of Specific Negotiating Objectives for the
    Initiation of NAFTA Negotiations,” here is an outline of the US negotiation concerning Agricultural Goods

    – Maintain existing reciprocal duty-free market access for agricultural goods.
    – Expand competitive market opportunities for U.S. agricultural goods in NAFTA countries,
    substantially equivalent to the competitive opportunities afforded foreign exports into the
    U.S. market, by reducing or eliminating remaining tariffs.
    – Seek to eliminate non-tariff barriers to U.S. agricultural exports including discriminatory
    barriers, restrictive administration of tariff rate quotas, other unjustified measures that
    unfairly limit access to markets for U.S. goods, such as cross subsidization, price
    discrimination, and price undercutting.
    – Provide reasonable adjustment periods for U. S. import sensitive agricultural products,
    engaging in close consultation with Congress on such products before initiating tariff
    reduction negotiations.
    – Promote greater regulatory compatibility to reduce burdens associated with unnecessary
    differences in regulation, including through regulatory cooperation where appropriate.

    Not much to panic about is it? But.of course if you believe something ratified on paper can never be reviewed or change because of time and experience, or if you are so partisan that any initiative from the current President must be opposed; than all sorts of dooms day events can occur.

    Ed

    Reply
    1. 2slugbaits

      Ed Hanson I think you’re missing the main point. Sure, most of those things you listed are fine objectives. Who is against promoting greater regulatory compatibility? Who is against eliminating barriers to US agricultural exports? No one. But politically the bullet points are as fanciful as Brexit Leavers believing they can withdraw from the EU and still retain all of the benefits of being in the EU. All desert, no spinach. The point of the EconoFact article is that Trump’s policies in other aspects of trade (e.g., tariffs on washing machines and solar panels) are likely to result in retaliation against US agricultural exports. You can’t block out imports without also threatening your own export markets. That’s the risk of a trade war. And trade wars make everyone worse off. When Trump threatens to withdraw from NAFTA (and those manufacturing workers with the red MAGA hats expect him to do just that), it also opens the door to Canada and Mexico restricting US ag exports.

      Reply
      1. noneconomist

        Tread lightly on the no spinach.
        In 2015, California growers exported $83 Million worth of spinach. That’s $30 Million more than growesrs realized from exporting avocados.) Official numbers from California Dept. of Food and Agriculture)
        Of course, on the dessert front, the state also exported plenty of oranges, strawberries, plums, peaches, lemons, cherries, melons, blueberries, blackberries, , pears, apples, figs, apricots, tangerines, and mandarins. In the $billions.

        Reply
    2. Moses Herzog

      @ Ed Hanson
      When NAFTA was first being debated, I was strongly against it. And if we could magically go back to that time point (around 1993) I would STILL be against it. But it’s kinda like the old cliche “That train has already left the station”. Or put it another way, I think it’s like building a skyscraper 110 floors tall that hasn’t been budgeted properly for or is built in a Chinese ghost town. After the tall skyscraper is completed and the resources have been spent, are you going to tear it down?? NAFTA is much like that in my mind. And frankly Hanson, you are showing your ignorance on this particular issue.

      “But.of course if you believe something ratified on paper can never be reviewed or change because of time and experience, or if you are so partisan”

      Hanson, have you ever heard of something called the WTO “World Trade Organization”?? You cannot renege on deals that have already been signed with the promise of the American government because “Well, I’m a ‘dealmaker’ and I don’t like this”. That’s how a 10 year old behaves, and that’s not how it works. You have MAJOR economic/financial penalties that are involved when you renege on prior promises made by the American government.

      On top of ALL that you’re killing ANY ability for the American government to make future economic deals, because no one wants to make deals or sign contracts with people who break promises and change terms just because they are a megalomaniac psycho with the attention span of a 4 year old.

      Let me be on the record as saying, I don’t the VSG will enact these changes to NAFTA, he will back away from the ledge because after the VSG has given enough lip-service insulting trade deals for the gap-toothed illiterates, he’s not going to want to piss off a huge number of American farmers (small family OR industrial farms), which is what will happen if he kills American farmers export trade.

      Reply
      1. Moses Herzog

        * I should have typed “I don’t THINK the VSG will enact these changes to NAFTA” in my last paragraph there.

        Reply
    3. Menzie Chinn Post author

      Ed Hanson: A lot of the objectives listed out were addressed in TPP. Well, we know where that ended up, much to agriculture’s dismay. If renegotiation is it, damage to US ag will likely be minimal. If we exit, which is my concern, well I’m pretty sure ag sector profitability will go down. And if China retaliates against soybeans, pretty sure I know the incidence of that measure.

      Reply
      1. Moses Herzog

        This brings up a very important economic question. Why did the tofu cross the road??

        [ pause ]

        To prove it wasn’t a chicken.

        Reply
      2. Ed Hanson

        Menzie

        So you are saying that the agriculture objectives of the US are reasonable and Mexico and Canada have agreed to such provisions. To me that gives some proof that renegotiation of NAFTA makes sense and there is should be some common ground. But if Canada and Mexico are balking at these changes, then it is likely that they see advantage of their countries over the US in these matters. It seems just as Trump says, it is time to make these arrangements more fair and more free.

        As for the direction for the ad sector, it depends on many things, such as how quickly the US can make direct country to country agreements, and how much the world needs US ag to feed itself and provide high quality products. I suggest you keep it in mind how much the world needs the US and its products and its markets. A fairer and freer world will come with reasonable negotiations.

        Ed

        Reply
        1. noneconomist

          Ed, do you recognize any of these original NAFTA supporters? McCain, Coats, Grassley, Dole, McConnell, Cochran, Lott, Danforth, Domenici, Thurmond, Hatch.
          I could swear the President sounds a lot like the Gephardt Democrats did back when. Their position, remember, was soundly pummeled by many of those listed above and other Republicans who gave NAFTA a solid Senate majority.

          Reply
        2. 2slugbaits

          Ed Hanson But if Canada and Mexico are balking at these changes, then it is likely that they see advantage of their countries over the US in these matters.

          Are Canada and Mexico balking at renegotiating some aspects of NAFTA? I don’t think so. They seem to support some of the possibilities from technology that weren’t available 25 years ago. My take is that Canada and Mexico are concerned about Trump’s campaign promises to ditch NAFTA and throw up tariffs to force Mexico to pay for a bigly beautiful wall. I can’t exactly blame Canada and Mexico for being leery about wanting to renegotiate anything with Trump. I mean…c’mon, the guy has a history of reneging on agreements and moving the goal posts. Just ask the 40,000 small businesses that he stiffed in New Jersey.

          Reply
          1. PeakTrader

            2slugbaits says: “Trump. I mean…c’mon, the guy has a history of reneging on agreements and moving the goal posts. Just ask the 40,000 small businesses that he stiffed in New Jersey.”

            Then, why would anyone do business with Trump in New Jersey or anywhere else? Just accept the fact Trump has great ability and is highly successful in making billions of dollars, raising a great family, winning a presidential election, etc.. He use to be a Democrat, till you liberals drove him far right.

          2. baffling

            “raising a great family”
            he is too busy cheating with models and porn starts to make this claim. ivana and melania have been responsible for raising his children. he has not been known as a model father or husband. or human, for that matter. but you seem to overlook those major flaws peak.

  3. pgl

    American farmers do reasonably well in a competitive world market for food. But the reality is that the Chinese have lots of choices where they buy their food. If we start a trade war with China, exports in general will suffer with farmers being the real losers. Some farmers are already regretting voting for Trump.

    Reply
  4. noneconomist

    California perspective: (from California Dept. of Food and Agriculture)
    “In 2016, California’s farms and ranches reported approximately $45.3 Billion for their output.”
    “In 2015, California’s agricultural exports totaled $20.69 Billion, …a decrease of 4% compared to the previous year”
    Top ten export destinations: EU, Canada, China, Hong Kong, Japan, Mexico, Korea, India, UAE, Turkey, VietNam.
    Most exports by rank: Almonds, Dairy and Dairy Products, Walnuts, Wine, Pistachios, Tomatoes Processed, Table Grapes, Rice, Oranges, Strawberries.
    (Hard to believe, but California exports almost as much Cotton as it does Lemons)
    Fairly obvious the damage to the state to be done by complete withdrawal from NAFTA just in the ag sector. But just as obvious: Trump supporters up and own the major valleys and inland farms and ranches, either had their heads up places they shouldn’t have, or they simply thought Trump was blowharding more than usual. Either way, they may yet get what will harm them more than they realized.

    Reply
  5. Ed Hanson

    A lot has been said and/or implied about the fear of trade wars coming from the US implementing anti-dumping tariffs; as if the cause comes only from the US. A quick look at headlines will find that such tariffs are occurring worldwide. For example. Canada imposes such on US drywall. The EU places such on Chinese pipeline company.

    And realize one thing, different from what is implied by others, such anti-dumping and anti-subsidy temporary tariffs are part of and allowed by the WTO. No renege there.

    Reply
    1. pgl

      No one ever said the US is the only country engaged in this behavior. What Menzie reasonably noted is that we step up the trade wars the way Trump wants to do – other nations will reply in kind. In no way have you rebutted this assertion.

      Reply
  6. 2slugbaits

    PeakTrader Then, why would anyone do business with Trump in New Jersey or anywhere else?

    Good question. And the answer is well known. Legitimate banks and investment houses refused to do business with Trump. That’s what drove Trump to all those Russian plutocrats looking to launder money. Trump tried shopping around, but his track record of bankruptcies and risky investing led banks to show him the door. And just recently Jared Kushner had to borrow big time from one of those plutocrats in order to avoid a $500M loss that would have wiped him out.

    Reply
    1. PeakTrader

      2slugbaits, that’s not what I’ve read. Trump gets projects done early, under budget, and turns unprofitable properties into profitable properties. Of course, he has a global empire of some businesses haven’t succeeded. Businesses all over the world do business with Trump – he’s a winner.

      Reply
  7. 2slugbaits

    PeakTrader Just accept the fact Trump has great ability and is highly successful in making billions of dollars, raising a great family

    “…raising a great family” Which family? He’s had at least three, right? And those are just the ones we know about. I didn’t watch the SOTU (I never do), but from what I heard about Melania’s body language it doesn’t sound like King Donald will be winning any “Husband of the Year” awards. Who knows, maybe Stormy Daniels can get Donald and his big hands a job in the porn industry if this President thing doesn’t work out.

    Reply
    1. pgl

      “Trump gets projects done early, under budget, and turns unprofitable properties into profitable properties.” – Peakaboo Boy!

      Under budget by not paying his suppliers and subcontractors. If his properties were always so profitable why has he defaulted on so much debt? Peakaboo Boy does not live in the real world.

      Reply
      1. PeakTrader

        #1 name caller – pgl – you live in the media propaganda world. Of course, you have no idea how Trump makes billions of dollars.

        Reply
        1. 2slugbaits

          No one has any idea how Trump makes his billions. In fact, no one really knows if he even has billions in assets or just billions in debts and the emperor has no clothes. That’s one reason he should show us his tax returns. He sure seemed to need that Apprentice salary an awful lot. If his time was really all that valuable, then why did run for office and spend so much time doing a ridiculous reality TV show? Trump’s path to wealth appears to be one of taking huge risks. Then keeping the winnings while declaring bankruptcies from the losings and walking away…stiffing those who took him at his word. Just like Trump University. Just like Trump Airlines. Just like Trump Steaks. Just like Trump wines. Just like Trump’s failed clothing line. Just like the Taj Mahal. Did you ever go to the Taj Mahal? I went there shortly after it opened. Worst casino ever. It was crass and tasteless even by Atlantic City standards. Almost as tasteless as the Trump Xmas card with King Donald sitting down, dutiful trophy wife Melania standing slightly behind him and poor neglected Barron off to the side riding some stuffed animal surrounded by gaudy furniture. King Cretin.

          Reply
          1. PeakTrader

            2slugbaits, earning over $200 million on the Apprentice is not chicken feed. And, Trump built-up his brand. I cited a real example to you before how Trump makes his money and you totally ignored it.

    2. pgl

      BTW – Melanie is only the 3rd wife Trump has cheated on. Trump has Newt’s track record. Three marriages – two divorces on account of adultery with the 3rd marriage on the rocks. Of course New York City’s mayor during the 1990’s has the same track record.

      Reply
  8. 2slugbaits

    PeakTrader You’re very gullible. Trump said he made $213M over 11 years, but like most things that come out of Trump’s mouth, it is probably a lie. Industry insiders estimate that it was closer to $100M including all of the ownership stakes and Chrysler deals that went with it. The head of NBC said that he only got $50K per episode, which is about one-fifth of what Penny on Big Bang Theory gets. Trump also lied about the show’s ratings, so why should we believe what he says about his salary.

    https://www.nytimes.com/2016/07/17/business/media/donald-trump-apprentice.html

    But even if we take him at his word, that only comes to less than $20M per year. For someone who claims to have assets in the billions, that’s a mighty poor return on your time and attention.

    Yes, I totally ignored what you said because it was ultimately based on Trump’s word, which isn’t worth anything. Show us the tax returns if you expect us to believe Trump’s claims to wealth.

    Reply
    1. noneconomist

      He’ll release his returns as soon as the IRS finishes the audit. I’m guessing that will be 2025, maybe later. Or about the same time all eminent domain cases re: the wall are also settled.

      Reply

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