A new report sponsored by the Farm Foundation in the United States and conducted by economists at Purdue University provides the extent of how much U.S. farmers could be economically impacted with current U.S. trade policies. Reports of the study’s findings are rippling across U.S. Midwest media and agricultural news sources.
The study suggests that U.S. agriculture is entering a volatile period in international trade that could risk trade gains achieved over the past thirty years.
The Purdue analysis indicates that there could likely be substantial benefits for U.S. farmers if the United States were to rejoin the former Trans Pacific Partnership, now termed the CPTPP. According to the authors:
“If the United States were to rejoin the TPP, the agreement would significantly benefit U.S. farmers — the loss of $1.4 billion would turn into a gain of $2.9 billion in additional agricultural exports.”
The report further concludes:
“If the current U.S. trade policy were to continue towards protectionism (i.e., with the U.S. withdrawal from TPP, with the global retaliatory tariffs and if the United States were to entirely withdraw from NAFTA), U.S. agricultural exports would drop by $21.8 billion. These negative trade impacts would be reflected in lower incomes for U.S. farmers, reduced agricultural land returns and farm labor displacement.”
In February, more than 100 agriculture groups sent letters to U.S. Trade Representative Robert Lighthizer and members of Congress urging the U.S. to join the CPTPP.
Regarding the recently negotiated USMCA trade agreement, the report states:
“The modest market access improvements in the USMCA (former NAFTA) will lead to an expansion of U.S. agricultural exports by $450 million, mostly in the dairy and poultry sectors. However, the retaliatory measures taken by Canada and Mexico, in reaction to the U.S. decision to raise tariffs on their exports of steel and aluminum, will cause U.S. agricultural exports to decline by $1.8 billion, and by $1.9 billion to these key trading partners.”
The report’s summary indicates:
“In summary, for the U.S. food and agriculture sector, the current shape of trade policies, including steel and aluminum tariffs and the corresponding retaliatory tariffs, is leading towards an export loss of $9.8 billion, with slight gains from the USMCA notwithstanding.”
From our Supply Chain Matters lens, the implications of this report are many.
It is no secret that the Trump Administration is under increasing pressure to resolve current trade conflicts to the benefit of U.S. business interest and especially U.S. farmers and agricultural interests. Retaliatory trade actions from China and Europe, regarding a series of imposed new U.S. import trade tariffs have especially targeted U.S. Midwest farmers who have mostly been President Trump’s or Republican Party affiliated legislators more active supporters.
This added quantification of the economic impacts of the current U.S. bi-lateral restrictive trade policies should add to the ongoing debate and building political pressures on the Trump Administration. The impacts on food related supply and product demand networks is obviously not to be minimized.
This March 2019 report which is titled: How Differing Trade Policies May Impact U.S. Agriculture: The Potential Economic Impacts of TPP, USMCA, and NAFTA, can be downloaded at this Farm Foundation web link.
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