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Potential Trade Tariff War Could Harm Michigan Agricultural Exports

June 15, 2015

Trade threats by U.S. trading partners, if enforced, could be devastating to Michigan commodities. Over the past few months, U.S. tariff threats have been met with proposed retaliatory responses by trade partners. Partners like China have already indicated an intention to follow through on tariffs if the U.S. imposes proposed tariffs. The result of a potential trade war would be harmful on a national level but its effects would also be felt on Michigan agricultural commodities. Goods such as soybeans, corn and dairy products, which are among the top agricultural exports in Michigan, could face heavy tariffs.

For now, recent tariffs on steel and aluminum levied by the president are bound to cause a direct effect on Michigan manufacturing industries. Brooking’s Institute, a nonprofit public policy group, estimates that Michigan imports about $2 billion worth of steel and aluminum. It also reports that Michigan relies on NAFTA for more than 70% of its steel and aluminum. Therefore, the tariffs will unfortunately affect this import, although its effects on the agricultural exports are still to be determined.

Although trading partners seem willing to negotiate with the U.S. to prevent a trade war, Michigan Agri-Business Association President Jim Byrum believes that the current uncertainty of the U.S. could have direct effects on Michigan’s surplus of agricultural commodities. As reported by MiBiz news, Byrum notes that the current situation may cause international customers to move on to more stable suppliers when it comes to trade.

Fortunately, in the meantime, investments in farming plants have not been deterred by the situation as businesses continue to make plans to expand their capacity, according to MiBiz news.

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