The Latest on Trade & Tariffs June 26, 2019 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate.edu 515-294-9911 1 1

Arable land

Why do U.S. farmers need export markets? That’s where the customers are That’s where the economic growth is That’s where the consumption growth is We produce surpluses We only eat high on the hog Exports are crucial to farm income

96% of the world’s population lives outside the US Source: CIA World Factbook

Population growth 2017 to 2050 Source: World Bank

Value of Ag Trade Source: USDA-FAS

U.S. Ag Exports Source: USDA-FAS

Top ten US ag export markets, 2017 Canada & Mexico buy 28% of US ag exports Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

Top 10 ag exporting states, 2017 Source: USDA Economic Research Service, “State Export Data”

Agricultural trade with Canada NAFTA Two-way trade up 395% since NAFTA Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

Agricultural trade with Mexico NAFTA Two-way trade up 577% since NAFTA Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

USMCA Source: USDA-FAS

Tariffs A tax on imports Used to reduce trade and protect domestic industries Has both positive and negative impacts Positive for domestic producers of the product with the tariff Negative for domestic consumers of the product with the tariff If specifically targeted against one country, then impacts are Positive for that country’s consumers Negative for that country’s producers 15 15

Example: China’s Soybean Tariff Positive for China’s soybean producers and U.S. soybean consumers Chinese soybean producers capture a higher price U.S. soybean consumers capture a lower price Negative for China’s soybean consumers and U.S. soybean producers Chinese soybean consumers pay a higher price U.S. soybean producers receive a lower price Price effects are due to supply changes Less U.S. soybeans imported by China More U.S. soybeans left on domestic market 16 16

Tariffs are a Policy Tool Can be used to: Reduce trade deficits Raise government funds Protect specific industries Serve as a bargaining chip in trade negotiations They’re not new. We’ve had tariffs on many goods since the U.S. was founded. Major shifts in U.S. tariffs in: 1789, 1790, 1792, 1816, 1824, 1828, 1832, 1833, 1842, 1846, 1857, 1861, 1872, 1875, 1883, 1890, 1894, 1897, 1909, 1913, 1921, 1922, 1930, 1934, 1947, 1962, 1974, 1979, 1984, 1988, 1994, 2002, 2009, 2018 17 17

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Source: USDA-FAS

Recent Movement in the Top 3 Source: USDA-FAS

Soybean Export Shifts Source: USDA-FAS

Corn Export Shifts Source: USDA-FAS

Ethanol Exports Source: EIA

Global Shares Source: USDA

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Thank you for your time. Any questions. My web site: http://www2. econ Thank you for your time! Any questions? My web site: http://www2.econ.iastate.edu/faculty/hart/ Iowa Farm Outlook: http://www2.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/