Tariffs are biting into Minnesota’s farm economy
This week, a monthly survey of rural bankers in parts of 10 Plains and Western states, including Minnesota, showed that they are rapidly losing confidence in the region’s farm economy. As KUNC reports,
The Rural Mainstreet survey for May, released Thursday, shows the survey’s overall index dropping from 50 in April to 48.5 this month. Any score above 50 suggests a growing economy, while a score below 50 indicates a shrinking economy.
Creighton University economist Ernie Goss, who oversees the survey, blames trade tensions and tariffs, saying they’re contributing to losses suffered by grain farmers — although livestock producers are faring better. Still, Goss says, bankers believe “the negatives far outweighed the positives.”
The survey’s confidence index, which gauges bankers’ expectations for the economy six months out, plummeted from 50 to 38.2 — its lowest level in almost two years.
I’ve written before about why I think these tariffs are misguided and why they might hurt Minnesota more than many other states.
The Chinese government leaders are not fools. They might not practice democracy, but they do understand it. Their retaliatory tariffs have been concentrated on agricultural exports from the heartland of President Trump’s vote.
As President Trump hikes tariffs on Chinese imports, the Chinese respond with tariffs of their own on their imports of American agricultural produce. In an effort to alleviate the suffering caused to farmers, the administration is doling out taxpayers cash as aid. American consumers are getting hit with higher prices from tariffs and, now, with the burden of propping up ailing farmers. Bad economics is, all too frequently, good politics. Here, both the economics and the politics are bad.
There are several lessons here. One is about the value of free trade. A second is about unintended consequences. Both are important for economics and public policy, but it is unfair that farmers in places like Minnesota are paying the tuition fee.
John Phelan is an economist at the Center of the American Experiment.