Global Competition Made 2018 a Bad Time to Start a Trade War

The United States is one of the largest players in the international agricultural market. With the continued growth of its agricultural output, the US agricultural sector has relied heavily on export markets to maintain its competitiveness and profitability. In fact, projections show the United States will export $137 billion in agricultural commodities in 2020. However, the 2018 trade disruptions with Canada and Mexico that led to a renegotiated, but still unratified NAFTA-like treaty (the USMCA) and the presently unresolved trade dispute between the United States and China have adversely impacted US agricultural exports. Of concern is how such disruptions might affect the competitive structure of markets. Today, Iowa farmers are concerned about the long-run implications of the trade disruptions to exports of major importance, especially beef, corn, pork, and soybeans. In this article, we discuss a metric of the historical export performance of these commodities from 1980 to 2018 and show that the trade disruptions occur at a time when the United States is in a particularly precarious position. At the outset of the trade disruptions in 2018, Iowa farmers faced the most competitive markets they had ever faced for these commodities. The longer the disruptions continue, the harder it will be to regain market share in the future.