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President Trump’s misguided trade war is hitting Minnesota’s farmers

According to the Minnesota Department of Agriculture’s 2018 update, our state exported a total of $7.1 billion of agricultural products in 2016, making it the 4th largest agricultural exporting state in the United States. Minnesota’s 226% growth in agricultural exports between 2000 and 2016 outpaced the rate of the U.S. generally: 163%. These exports contributed over one-third of the state’s total agricultural sales in 2016 and supported over 57,000 jobs both on-farm and off-farm.

Soybeans are crucial to this. They are Minnesota’s top agricultural commodity: the $2.1 billion of soybean exports in 2016 contributed 30% of the state’s total agricultural exports. And the leading destination for Minnesota’s soybean exports is China. As a result, Minnesota farmers are being hit disproportionately hard by the U.S.-China trade war.

President Trump has imposed successive rounds of hikes in import tariffs on Chinese goods. Not surprisingly, the Chinese have retaliated. The Chinese government has ‘asked’ its state-owned enterprises to suspend purchases of U.S. agricultural products pending a resolution of this conflict. Minnesota’s Department of Employment and Economic Development estimates that $1.5 billion of our state’s exports to China could be affected by Beijing’s countermeasures, including $63 million of soybean exports. Certainly, according to data from the U.S. Department of Agriculture, exports of soybeans to China in the period October 2018 to June 2019 (8,708,173 metric tons) were down 65% from the period October 2017 to June 2018 (25,037,209 metric tons).

Given how important soybeans are to Minnesota’s farm economy, this hits our state particularly hard. According to data from Minnesota’s Department of Employment and Economic Development, the state’s exports to China – our second biggest export market overall in 2018 – fell by 13% overall in the first three months of this year.

I’ve written before about why I think these tariffs are misguided and why they might hurt Minnesota more than many other states. They are bad economics. And, from the President’s point of view, they are bad politics. The economy is one of President Trump’s ‘Trump’ cards going into an election cycle. In the nine quarters since his inauguration, data from the Bureau of Economic Analysis shows that GDP growth has averaged 2.8% (1.9% here in Minnesota) compared to 1.9% (1.6% in Minnesota) in the nine quarters before that.

For his own sake, as well as that of Minnesota’s beleaguered farmers, President Trump should bring this trade war to an end.

John Phelan is an economist at the Center of the American Experiment. 

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