Farm country could lose big in a trade war

With the announcement this afternoon that President Donald Trump wants to charge a 20 percent tax on imports from Mexico to pay for his wall across the country’s southern border, there’s a fair chance of an all-out trade war erupting.

What happens then?

For Minnesota and the rest of the Midwest, it likely means farmers are hurt even more than they have been in recent years by low prices caused by abundant crops.

The U.S. exported $2.3 billion worth of corn in 2015, as well as soybeans ($1.4 billion), dairy products ($1.3 billion), pork & pork products ($1.3 billion), and beef & beef products ($1.1 billion).

The losses in a trade war with Mexico are on top of the losses caused by the decision to pull out of the Trans-Pacific Partnership earlier this week.

“It would be really damaging for us, given that so much of our products go to Mexico now,” Dermot Hayes, an Iowa State University agricultural economist, said earlier this week.

Sixty percent of the U.S. soybean crop is exported.

But manufacturers will be hurt too, if Mexico retaliates, which, of course, it will.

Machinery from the United States is, by far, the biggest export, worth more than $42 billion each year. Electrical machinery is another $41 billion, cars and trucks add $22 billion. (Source: Office of the U.S. Trade Representative to Mexico).

What will a 20 percent tax do to U.S. consumers? Fruits and vegetables will increase in price if you can find them. Mexico is the country’s second-leading supplier of agricultural goods: fresh vegetables ($4.8 billion), other fresh fruit ($4.3 billion), wine and beer ($2.7 billion), snack foods ($1.7 billion), and processed fruit & vegetables ($1.4 billion).

A trade war could also cripple U.S. corporations.

“It is important to understand that more than half of all visible trade between the two countries is due to corporate supply chains, in which goods are manufactured in the US, but assembled in Mexico,” the research firm Pavilion said shortly after November’s election.

  • Moffitt

    I am at a farm meeting right now. They’ve noticed.

  • Will

    Donald Trump’s America, are you not entertained? Trade war on week 1.

    • rallysocks

      I do have to admit that i LOL every time I hear Trump say, “Mexico must treat America fairly, and with respect.”

      • Jerry

        Grasping irony is not one of his strong suits.

  • William Hunter Duncan

    Yeah, well, big agriculture controlled by Monsanto, Cargill etc “feeding the world” has just about exterminated bees and butterflies here in mid-America, has destroyed small communities, polluting the land and waters, and has led to Americans being unhealthy from junk food – so to hell about so called “free-trade”.

    • William Hunter Duncan

      Oh, and GMO corn heading to Mexico has led to the end of hundreds of thousands of small farms, contributing to the increase of mass violence in Mexico – so again, to hell with big corporate ag.

    • Jerry

      You do realize it is still small farmers doing the farming?

  • wjc

    Mark today down as day 1 of the Trump recession.

  • Tom

    What did people expect? They voted for an insane man, it’s on the people that voted for him, unfortunately the rest have to suffer as well, hate to say it but the hatred and intolerance in this country brought this man to power.

  • Jeff

    I’m relatively ignorant but wouldn’t this be a violation of NAFTA? Wouldn’t he have to get it repealed first? For that matter he has to go through Congress and I sort of doubt any farm states would go for this.

  • kevins

    I have not heard from my neighbors yet. One of the neighbors is number one on the list of dollars received from subsidies IN THE STATE! I’m guessing they voted for The Donald. Bless them, but there will be second thoughts.

  • Anna

    When I read the transcripts of his recent television interviews it reminds me of a manic depressive in extreme manic mode.

    Persons who are in a manic state have very little need for sleep some to the point that the constant racing pace eventually kills them because their hearts literally give out because of the constant flow of adrenaline.

    They dismiss any mention of failure due to delusions of grandeur. If they have a sense of justice and fairness or right and wrong, it flies out the window due to feelings of invincibility that have to be fed with constant adulation and endless praise.

    They promise things they can’t possibly deliver because they believe themselves invincible.

    I truly believe his advisors and his White House staff cannot control him and they know it. They are probably saying to themselves, “I gave up a full partnership at a prestigious law firm for this?”

    It makes sense that those who supported him will now reap the fallout of his endless efforts to alienate and vilify anyone who tries to oppose him.

    Unfortunately it’s going to get much worse before it gets better.

    • Rob

      I love your take on Tea-rump; I just hope that his mania leads him to self-destruct relatively quickly, with a minimum of collateral damage.

  • Mike Worcester

    Candidate Trump was highly critical of Pres. Obama’s normalizing relations with Cuba, a switch from his past pronouncements. And who was a big supporter of that normalization? Ag interests.

  • Rob

    This is what happens in a kakistocracy.

  • People saying “screw the MN farmers, they voted Trump” on a trade war, aren’t very smart about how the MN economy works.

    • MikeB

      People have a lot of anger and frustration, need a place to direct it and your point is a great reminder.

      Channel your energies, get out to talk with people > the Internet thing.