Olson: Trump tariffs won’t help Texas agriculture

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Just as a reminder, farming can be an unpredictable business, making successful crop production tough with wild weather patterns, weed and pest pressure - not to mention labor shortages. Given fluctuating markets remains another uncontrollable variable, the U.S. international trade policy should work to stabilize the critical export markets on which Texas commodity crop and livestock producers rely. Yet, at a critical time in crop production cycles, when corn, cotton, and sorghum are being planted, the administration’s introduction of tariffs, rocked the export market and ignited the threat of a “trade war.”

Against the advice of members of both parties in Congress, as well as his own economic advisers, the president recently announced that the U.S. would impose tariffs of 25 percent on imported steel and 10 percent on imported aluminum, which took effect March 5. While some in the steel industry celebrated, many are doubtful of a positive outcome. A net gain in jobs is unlikely. The ripple effect of job-loss in other sectors and increased consumer prices are expected. And the ultimate impact on production costs and international trade will hit our farm families first - and hardest.

In addition, as reported in the Financial Times, many more jobs are threatened as production costs rise for automakers, the energy sector, the beer industry and especially the manufacturers of agricultural equipment. Higher production costs also lead to higher consumer prices, which directly impacts everyday families and makes American goods less competitive both domestically and on international markets.

What happens in Texas? Bottom line is this - production costs will rise and trade in foreign markets will begin to disappear. Agricultural equipment is the second largest expense, next to the actual land. With equipment costs on the rise, the anticipated increase in prices for tractors and other machinery will show as a bright red negative in farmers’ bottom lines. This may mean holding onto aging equipment a bit longer and risking lost time due to downed tractors or other machinery, or even worse, putting the safety of producers at risk. Unfortunately for farmers, they are seldom in a position to just pass the increases along to everyday consumers.

The most urgent concern for the Texas agriculture sector is retaliation from those countries that export steel to the U.S. Exports to China from Texas make up $10 billion of our state’s economy, and is the second largest export market for American agricultural products such as soybeans, corn, sorghum, and cotton – all major crops here in Texas. Chinese officials have already hinted at retaliatory trade regulations, specifically mentioning agricultural products as their first target. The glowing promise of access to China as an emerging market for Texas beef and other products is now fading. Other key trading partners that will feel the pinch of these tariffs, namely Mexico and Canada, have also assured swift reprisal, with U.S. agriculture as the most likely target.

The spiral effect of these tariffs is alarming. One Texas agricultural expert warns that, “fewer exports leads to larger surpluses, which creates lower revenue for farmers, ultimately leading to the demise of farm businesses and the loss of rural Texas communities.” He simplified the outlook by saying, “in short, it is bad for Texas labor, bad for Texas business, and especially bad for Texas families.”

Where are the reasonable voices advocating for Texas in Washington? Our representative voices must be speaking in a whisper, or are just mute. Remember, all Texans are involved in agriculture whether we farm, ranch, eat, wear clothes or live in a home built of Texas timber. We are all impacted by this trade issue and should demand level-headed, reliable, and honest leadership for Texas agriculture. Send a message that you care about Texas economy, Texas products and those hard working Texas families.

Kim Olson is the Democrat candidate for Texas Agriculture Commissioner.