While it might be some time before the direct impacts of the trade war with China has affected Iowa’s economy, a group of eight economists and agriculture development experts at Iowa State University attempted to make exactly those projections this past September.
“The Impact of the 2018 Trade Disruptions on the Iowa Economy,” published by ISU’s Center for Agricultural and Rural Development, looked at the lead up to the ongoing tariffs and counter-tariffs between the United and China, and estimated some of the near-term impacts for Iowa for the year 2018.
Among their findings:
• Overall losses in Iowa’s gross state product are calculated to be $1 billion to $2 billion, off a GSP of $190 billion.
• Overall losses to the state’s soybean industry of $159 million to $891 million. Iowa soybeans are a $5.2 billion industry, according to the researchers.
• Overall losses to Iowa’s corn industry of $90 million to $579 million. Iowa corn is an $8.5 billion industry.
• Overall losses to the state’s pork/hog industry of $558 million to $955 million. The Iowa pork/hog industry is a $7.1 billion industry.
• A 2 percent drop in ethanol prices, resulting in approximately $105 million in lost revenues to Iowa producers.
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• Revenue losses in these industries translate into additional lost labor income across the state. Labor income declines from the impacts to the corn, soybean and hog industries range from $366 to $484 million without federal offsets and $245 to $364 million with federal offsets.
• Iowa tax revenue losses — personal income and sales taxes — range from $111 million to $146 million. Federal offsets would reduce tax losses to $75 million to $110 million.
• The aggregate impact across Iowa’s major agricultural commodities totals approximately $1.8 billion to $2.3 billion, or roughly 16 percent to 20 percent of Iowa’s agricultural export value.
The ISU report noted that, since the early 2000s, China has “replaced Japan as U.S. agriculture’s foremost destination in East Asia.”
In fact, a “boost in the late 2000s is tied to the dramatic expansion of soybean trade with China and the general rise in commodity prices from 2006 to 2013.”
The ISU report can be read at https://bit.ly/2xRdDbH.