Every day, there is more talk of global tensions in respect to trade, tariffs and globalization in general. A recent CNN headline even outlined this, “US-China trade war fears: how bad could this get?” Then, the Wall Street Journal penned a piece titled “Economists Worry a Trade War Could Derail U.S. Growth.” It seems the concern grows more each day.
Why should we be concerned, especially in regard to agriculture?
According to the U.S. Department of Agriculture, the U.S. is a net exporter of agricultural commodities, with a trade surplus of $21.3 billion. This means the U.S. cannot eat everything it produces and we export more products than what we import.
As tensions continue to rise globally, we see many actions being taken to prove a point, with retaliatory actions soon following. These actions include tariffs, import quotas and importing commodities from different countries. The agriculture industry is extremely competitive worldwide.
As those actions start to take effect, and companies must pay more for our commodities, they will look other places or find substitutes for our goods.
Cole Lickley | Argonaut
Take the beef industry. The U.S. Meat Export Federation has placed a value on our beef exports at over $7 billion. If one of the countries we sell to decides to place a tariff on beef, private companies will look to beef markets around the world such as Brazil, Australia or Canada to get the beef they need at better prices.
Not only are these tensions harmful, our global trade agreements that we decide to abstain from play a huge role on the outlook of our agricultural products. Ensuring we have somewhere to send our commodities in the future years, with little to no trade barriers, is very important to me and other agriculturalists.
Looking back at the election in 2016, I remember listening to both candidates Donald Trump and Hillary Clinton talk about how negatively the Trans-Pacific Partnership (TPP) would affect the U.S. economy. It seemed like they debated who hated TPP more, and there wasn’t a candidate who portrayed a strong globalized platform, which was frustrating as someone who understands the importance of exporting products.
Not only were we pulled out of TPP, there are now concerns Trump may try to either dissolve or renegotiate the North American Free Trade Agreement (NAFTA), which could be detrimental to many agricultural sectors. The idea of these trade agreements and pacts is to allow for a flow of goods to pass through borders without much of a tariff burden and so the fewer agreements we have, the more expensive our commodities are to importers. Our advantage over other countries then diminishes.
I understand the arguments that these trade agreements need to be renegotiated to ensure we get the terms we want and deserve. But at what cost? If we continue creating global tension, at what point will other countries say “no more” and walk away from the negotiation table?
Cole Lickley can be reached at [email protected]