December 13, 2018

Trade war could cost Iowa farmers $2.2 billion, ripple through economy

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The Trump administration will impose tariffs on $200B more in Chinese goods starting next week, escalating a trade war between the world’s two biggest economies and potentially raising consumer prices ranging from handbags to bicycle tires (Sept 17)
AP

Iowa farmers could lose up to $2.2 billion from the U.S.’s trade wars, a new study shows, and those losses would ripple through the economy, hitting state tax receipts, jobs and industries such as manufacturing.

A new Iowa State University report digs into the impact of tariffs on Iowa ag exports, showing a few winners, but mostly losers, from the escalating trade disputes with China, Canada and other countries.

Here are some of the projected impacts:

$110 million — The possible cut to state tax receipts, thanks to reduced income to Iowa farmers, struggling with low corn, soybean, pork and ethanol prices. And that’s after farmers receive emergency federal government aid.

Iowa growers are expected to get $550 million in the first round of direct aid. Altogether, U.S. farmers are expected to see $4.7 billion in assistance from the $12 billion federal package.

$364 million — The economic impact on labor from reduced Iowa farmer spending. That spending supports about 10,000 jobs across multiple industries, and factors in federal assistance.

$348 million — The maximum losses to Iowa manufacturers, given higher costs for steel, aluminum, electronics and other inputs used in production. Companies pay higher prices because of U.S. tariffs on imports.

The biggest tariff winner: Iowa aluminum and steel producers are projected to see a $215 million boost, given higher prices for their products.

Pork producers likely will be the biggest ag losers. They stand to lose as much as $911 million, the report shows.

Soybean growers could lose up to $520 million; corn growers, $337 million; and dairy, $20 million. Tariffs could cost Iowa ethanol producers $105 million, the study shows.

Iowa is the nation’s second-largest ag exporter, after California, exporting close to $11 billion in 2016, the report shows.

Iowa leads the nation in corn, soybean and pork exports.

As with the nation, Iowa’s leading ag export partners are Canada, China, Mexico, the European Union and Japan.

Tough trade talk this spring led to tit-for-tat tariffs on U.S. exports to China, Canada, Mexico and the European Union.

U.S. and Mexico leaders say they’ve reached a new trade agreement, but Canada has been slow to sign on.

And U.S.-China talks have broken down, with President Donald Trump recently announcing tariffs on $200 billion more in Chinese goods, pushing the total to $250 billion.

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