The Trade War’s Impact on Agriculture

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BRYAN, Tex. (KBTX) - On average, one out of every three acres of crops grown in the United States is exported to other countries. Those exports account for about twenty percent of the value of annual agricultural production so when other countries raise tariffs on U.S. agricultural products to make them more expensive for their consumers to buy, it definitely has a negative impact on our nation’s farmers. Joe Outlaw is a Texas A&M AgriLife Economist.

“Among the sectors of the U.S. economy, the only sector since 1960 that has run a positive surplus, meaning we export more than we import, the only sector in the United States that has been consistently a net exporter is agriculture.”

Outlaw says that when China targeted U.S agriculture products for tariffs, it’s because that’s where they thought they could hurt us the most.

“There are certain things that we trade with them a lot. Take soybeans. They were our number one market for soybeans. Right now that market has decreased by ninety-eight percent, so we basically don’t sell them soybeans any more. Does that mean we don’t sell our soybeans? No. That means that other markets, in this case Brazil sells more of their soybeans to China and we sell to whoever Brazil was selling to.”

So does that mean we’re not hurt by the tariffs?

“Yes we are because the transaction costs for those other business activities lowers the price to the producers here in the United States. The president understood that commodities were being hurt so in 2018 he authorized about twelve billion dollars in assistance. Three billion roughly being purchases of commodities that we be donated to charities and other things. About nine billion of that would go to agricultural producers.”

The majority of that went to soybean producers. This year there will also be trade assistance.

“The price of soybeans has dropped by two dollars or more, so producers are looking around and saying I’m going to have to produce something else that I can sell to someone else and so when they move their acres into those crops it has a depressing effect on those crops. So the point was this new round of trade help is going to be on almost every commodity produced in this country.”