Farm Bureau report: $1B hit to Nebraska from retaliatory tariffs

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KEARNEY, Neb. – A new report from the Nebraska Farm Bureau shows retaliatory tariffs imposed by U.S. trading partners in response to U.S. steel and aluminum tariffs have cut Nebraska farm level revenue between $700 million and $1 billion dollars in 2018. The report also shows the retaliatory tariffs have cost the state of Nebraska between $164 million and $242 million in lost labor income, in addition to the loss of 4,100 to 6,000 Nebraska jobs.

In addition to identifying financial losses, the report “A Path Forward on Trade – Retaliatory Tariffs and Nebraska Agriculture,” also offers specific actions to eliminate retaliatory tariffs and secure long-term access for agriculture and other U.S. products into international markets.

“International trade is critical to agriculture. In most years the value of agriculture exports will equal roughly 30 percent of the total agriculture commodity receipts or sales for the state of Nebraska. Retaliatory tariffs make our U.S. products more expensive for international customers, meaning they buy less or buy from someplace else. This report provides a clear picture of how much we’ve lost due to those tariffs and the need to improve our trade relations,” said Steve Nelson, Nebraska Farm Bureau president.

The economic analysis in the report specifically examines the impacts of retaliatory tariffs on corn, soybeans, and hogs to the Nebraska economy. Beef is absent from the analysis as 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.

“Fortunately for Nebraska, U.S. beef exports are actually projected to exceed $8 billion in 2018, a record high. The continued strong demand for our beef helps mitigate the losses in other commodities,” said Jay Rempe, Nebraska Farm Bureau senior economist and co-author of the report.

Using June 1, 2018 cash prices at Hastings, Nebraska, the analysis found retaliatory tariffs dampened corn prices by 14 to 21 cents per bushel and soybean prices by 95 cents to $1.54 per bushel. Similarly, the analysis found Nebraska pork price reductions in the range of $17.81 to $18.80 per head due to the 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 further shows 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 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 report also recommends specific actions to eliminate retaliatory tariffs and improve market access for agriculture and other U.S. goods. Those actions include:
-Securing Congressional Approval and Finalization of the U.S., Mexico, Canada Agreement (USMCA).
-Elimination of U.S. Imposed Steel and Aluminum Tariffs.
-Swift Action to Secure a Free Trade Agreement with Japan.
-U.S. Inclusion in the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) or Securing Bi-lateral Trade Agreements with CPTPP Nations.
-Securing a Trade Agreement with the European Union.
-Use of a Multi-National Approach with U.S. Trade Partners to Address China.

“These actions define a path forward in remedying the losses we’ve seen from the retaliatory tariffs imposed by our trading partners, but also present an opportunity to improve trade relations with our closest allies,” said Jordan Dux, Nebraska Farm Bureau’s director of national affairs and co-author of the report.

According to the report, finalization of the USMCA presents an opportunity to continue productive relations with the two largest consumers of Nebraska agricultural goods in Canada and Mexico. It also suggests the elimination of U.S. steel and aluminum tariffs will present an opportunity for the U.S. to get the most out of the USMCA agreement while opening the door for more positive trade relations with the European Union.

“Japan presents a major opportunity for Nebraska beef. However, because the U.S. is not a part of the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) Nebraska beef producers stand to lose as part of that agreement has Japan lowering beef tariffs for CPTPP partner countries, like Canada. Nebraska beef producers will be at a major disadvantage in paying higher tariffs than our competitors unless the U.S. joins or secures similar bi-lateral agreements with these CPTPP member countries,” said Dux.

The report also suggests the collective actions open the door for a multi-lateral approach for the U.S. and its trading partners to push China on trade negotiations.

“By building a coalition with China’s neighbors and largest customers, the U.S. creates a path forward in trying to change China’s behavior when it comes to theft of intellectual property and failure of China to meet World Trade Organization rules and standards. China remains a major market for U.S. goods, especially soybeans. We need to hold China accountable and by using a multi-national approach improves our chances in moving China in the right direction,” said Dux.

The Nebraska Farm Bureau is a grassroots, state-wide organization dedicated to supporting farm and ranch families and working for the benefit of all Nebraskans through a wide variety of educational, service and advocacy efforts. More than 61,000 families across Nebraska are Farm Bureau members, working together to achieve rural and urban prosperity as agriculture is a key fuel to Nebraska’s economy.