Farmers are always looking to the sky hoping for cooperation from Mother Nature. For Illinois farmers this year, the weather has been good enough that they’ve had a different source of anxiety: an emerging trade war.
“My biggest worry is with President Trump renegotiating NAFTA and tariffs he has put on products coming from China and of course how they are retaliating,” said Daryl Brinkmann of Carlyle, IL, to Brownfield News Ag, who grows soybeans, corn, and wheat. “I hope that cooler heads can prevail, and we can get some of this straightened out before it goes too far.”
Brinkmann and other Illinois farmers and businesses are caught the middle of a trade brawl with some of our biggest trading partners that threatens potentially hundreds of billions of dollars’ worth of U.S. exports.
It has the potential to damage the good economic momentum we’re experiencing.
This global trade dispute has local effects, as we see in Illinois where 1.7 million jobs are supported by trade. $4.3 billion in exports are threatened by tariffs from Canada, Mexico, China, and the European Union.
Farmers see markets for their exports shrink
China’s tariffs on U.S. pork exports went into effect in April and July, putting Illinois pig farmers like Thomas Titus in a bind.
"We're going to potentially be looking at an increase of 80 percent on the tariffs of the pork that we export there,” Titus told told Springfield, IL’s WRSP. “I would expect the amount of product that we begin to export to slowly begin to decrease to almost zero."
The impact of these retaliatory tariffs is hitting like a ton of bricks: “In recent weeks USDA has reported no sales of pork to China… Federal data released Monday showed a record level of beef, pork, poultry and turkey being stockpiled in U.S. facilities, rising above 2.5 billion pounds, USDA and other agricultural analysts said,” according to KWTX in Waco, Texas.
On top of that, Mexico imposed a 20% tariff on pork in June. $41 million of Illinois pork is exported to Mexico.
It’s not any easier for soybean farmer, John Kiefner of Manhattan, IL. He saw a steep drop in the price of soybeans earlier this year, and being unable to export his crop because of retaliatory Chinese tariffs doesn’t sit well with him.
“I want my income to come from China, not Washington,” he told the Daily Southtown.
Illinois is the nation’s top soybean growing state. Farmers there export $1.3 billion of soybeans to China, making it one of that state’s exports hardest hit by retaliatory tariffs.
Nationwide, U.S. farmers exported $14 billion of soybeans to China in 2017, according to the American Soybean Association. 31% of production.
Manufacturers hit with higher costs
Illinois manufacturers are also feeling the pinch, because they’re dealing with higher prices.
Aneesa Muthana, owner of Pioneer Service in Addison, IL, told the Wall Street Journal, that because of steel and aluminum tariffs, her company lost $60,000 worth of annual orders from a customer. “This is really hurting manufacturing,” she said.
These tariffs are also driving away domestic manufacturing.
“A few of our customers have moved some of their production back to Europe and Canada because of the increases in prices for raw materials,” Jerry Pines, chairman of Millenia Products Group in Itasca, IL, told the Wall Street Journal.
Edward Farrer of Principal Manufacturing in Broadview, IL, said taxes on imported steel and aluminum are squeezing his company too.
“The tariffs have been a springboard for domestic producers to increase their price,” he told the New York Times.
“Delivery dates are not changing, and product must be on time,” Farrer added. “We are caught in the middle between politics, customers and steel producers.”
To learn more, visit www.TheWrongApproach.com to see a map showing how states are affected by tariffs from China, the European Union (EU), Mexico, and Canada.