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dfp-brad-robb-a-muhammad2.jpg Brad Robb
Andrew Muhammad, professor, Department of Agricultural and Resource Economics, University of Tennessee, revealed some of the latest economic data to provide insight about the impacts of tariffs during his recent speaking engagement in Trenton, Tenn

What is the real impact from the trade war and other trade agreements?

University of Tennessee economics professor sheds light on trade data.

It may be difficult to believe that despite the United States being in a trade war with China for a year, U.S. ag and ag-related export values are only down around 5 percent.

From October 2017 to September 2018, U.S. ag exports totaled just over $143 billion. That same time period one year later, they were slightly over $135 billion.

"That's not too bad considering we have been in a tit-for-tat trade war with one of our largest export partners," says Andrew Muhammad, professor, Department of Agricultural and Resource Economics, University of Tennessee.

Muhammad offered that assessment to a group of ag industry representatives in Trenton, Tenn., recently. "After the loss in U.S. soybean exports to China, other countries and regions such as the European Union stepped in and increased their purchases of U.S. soybeans from 2.4 million bushels in the 2017/18 marketing year to 5.2 million bushels in the 2018/19 marketing year. This, however, didn't make up for the losses in the Chinese soybean market."

Cotton

Both Brazil and Australia produce high-quality cotton. Since the trade war began, both benefitted from the retaliatory tariffs on U.S. cotton exports to China. "Tariffs from the ongoing trade war escalated China's total tariff on U.S. cotton to about 65%," Muhammad says. "Even though international cotton prices, in general, were declining, Brazilian prices declined at a much slower rate."

Vietnam has purchased more U.S. cotton since the trade war began. "Ironically, on almost a one-to one basis, much of the raw cotton fiber the U.S. exports to Vietnam is spun into yarn and exported to China," Muhammad says. "For several years Vietnam has been an emerging market for U.S. cotton."

Just last spring, the U.S. accounted for nearly 70% of China's cotton imports. "The three-year average during the 2014/15 to 2016/17 time period was between 40% to 50%," Muhammad says. "Now, it's only 20%, while Brazil's share has gone from 30% to nearly 50%."

U.S. manufacturing

The U.S. manufacturing sector is often viewed as taking a big hit from manufacturing in foreign countries. "How many times have you heard someone say, '…the U.S. doesn't manufacture anything anymore? What is actually driving attitudes about international trade is the assumption that domestic factories are closing because of imports from China," Muhammad says. "Looking at data over the last 20 years, durable goods manufacturing is actually up 166%."

There are issues with certain manufacturing sectors, but not total manufacturing. "One of the biggest sectors that suffered was apparel and leather goods," Muhammad says. "The Multi-Fiber Arrangement imposed limits on textiles imported into the U.S. The first month after the MFA ended (in the early 2000s), imports of textile products to the U.S. exceeded textile imports the entire previous year."

U.S. manufacturing reached a record in 2017. One reason many people believe the U.S. manufacturing sector has suffered is because manufacturing employment has gone down. "There was a time when our labor force lifted and moved things with brute strength," Muhammad says. "The fact is, automation and technology have been more detrimental to manufacturing employment than China could ever be."

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