One misconception about trade wars is that they only hurt farmers. Not true.
Even those who don’t export bushels of soybeans will feel the impact, especially if the impeachment crisis eliminates any chance of reaching a deal on a new trade pact between the three North American economies.
A monthly report from the Institute for Supply Management highlights the risk. In September, Missouri’s overall business index dropped below growth-neutral, to a figure of 49.2, on weakness in inventories, employment and production. A number below 50 reflects a contracting economy. A national report, released Tuesday, showed that U.S. factory activity slowed for the second straight month.
“Manufacturers are experiencing essentially flat growth with new orders and other indicators pointing to slow to no growth in the months ahead,” said Ernie Goss, an economics professor at Creighton University in Omaha, Nebraska.
This impacts a St. Joseph economy that should benefit from the export of manufacturing goods. The U.S. Bureau of Labor Statistics released one study that showed 14 percent of the St. Joseph’s workforce engaged in production work, compared to 6.3 percent nationwide.
Take a look at Triumph Foods, which exports 28 percent of its product. Like others in the U.S. pork industry, Triumph Foods, which is St. Joseph’s second-largest employer, has seen European competitors capture more of the revenue from increased pork prices. Because of trade tensions, U.S. pork companies aren’t reaping the gains they should see from higher prices.
China isn’t the only problem. Overall U.S. pork shipments to Japan dropped 1 percent after the Trump administration pulled out of the Trans Pacific Partnership. Meanwhile, Japan’s imports of European pork grew 17 percent after that country reached a separate deal with the European Union following the TPP’s demise.
Now, the U.S. has reached a trade deal with Japan, which comes as a relief to exporters even though it won’t carry the same impact as a wider TPP deal. China is increasing U.S. pork and soybean purchases ahead of this month’s trade negotiations.
These are hopeful signs, but are they enough to counter the self-inflicted wounds of a trade war? The question is one that should weigh on the minds of policymakers who will be consumed by impeachment talk and election posturing in the coming months. The answer to the trade question will have a significant effect in St. Joseph, given the outsize role of manufacturing and agriculture on our economy.
Another misconception about trade wars is that they’re easy to win. They are easy to start. Now is the time to think about ending them.