Prices on goods sold in the United States are likely to increase as an extensive array of tariffs on foreign goods, particularly from China, remain in place, according to an agricultural economist with Ohio State University.

“I don’t think we’ve seen the full effects of the trade war yet,” says Ian Sheldon, a professor who serves as Andersons Chair in Agricultural Marketing, Trade and Policy in OSU’s College of Food, Agricultural and Environmental Sciences (CFAES).

The Trump administration first imposed a tariff on foreign steel and aluminum and then on a range of products from various countries — including about 5,000 products made in China and sold in the United States. China and other countries have, in turn, raised tariffs on U.S. products sold in their countries, which has cut the demand for them.

“And the Chinese are showing no signs of backing down,” Sheldon says.

Trade deficit worsening
The tariffs the Trump administration imposed are intended to reduce the U.S. trade deficit by increasing the number of U.S. goods sold abroad, and reducing the number of foreign goods Americans buy. But that hasn’t happened, Sheldon says.

“In fact, it looks like the trade deficit is getting worse right now,” he adds.

The trade deficit remains high because Americans consume too much and save too little, Sheldon points out.

He will discuss the impact of the tariffs and other aspects of trade at the Nov. 2 Agricultural Policy and Outlook Conference sponsored by CFAES’ Department of Agricultural, Environmental and Development Economics.

The agenda for the conference includes:

• Barry Ward, director of Ohio State University Extension’s Income Tax School, who will present “Farm Input Outlook.” OSU Extension is the outreach arms of CFAES.

• Ben Brown, program manager of the farm management program in CFAES, who will present “Commodity Outlook: South American Focus”

• Ani Katchova, associate professor and chair of the farm income enhancement program, who will present “Ohio Farm Financial Conditions and Outlook”

• An agricultural policy panel, including Carl Zulauf, CFAES professor emeritus; Fred Yoder, owner of Yoder Ag Services; and Kevin Elder, a producer

Net farm income is expected to further decrease in 2018, the fifth consecutive year of low incomes, according to USDA. Since 2013, net farm income in the United States has been cut in half.

“There’s concern about how long this agricultural downturn is going to last,” Ani Katchova says. “Five years is a long time for persistently low income.”

Commodity prices have gone down, while the costs of operating a farm and producing crops have gone up, Katchova says. Record yields this year for corn and soybeans have not helped Ohio farmers increase their incomes because of the lower prices they’re getting per bushel for their crops, she says.

“You would think that in a year with record yields for corn and soybeans, income would go up — but that likely isn’t going to happen because of the low commodity prices,” Katchova says.

The conference will be held at OSU’s Nationwide and Ohio Farm Bureau 4-H Center, 2201 Fred Taylor Drive in Columbus.

For more information about the conference, visit go.osu.edu/outlookconference2018.

Source: OSUE