Trade Wars

What started out in hard goods like steel and aluminum has made its way into fresh market produce like apples and cherries.  The tit-for-tat tariff race is affecting producers all across the country.

First the European Union responded with one-third of their retaliation list containing agricultural products.  Cranberries were on the EU list in an effort to impact Speaker Paul Ryan’s home state of Wisconsin, the largest cranberry producer. Canada fired back with a list including cucumbers and orange juice.  Mexico has apples on their list while China has apples and cherries. There are other commodities like corn and soybeans, however those growers can adjust their output much quicker than someone who is harvesting tree fruit.

The United Nations Food and Agricultural Organization said that food prices declined in June – the first month-over-month decline in 2018 despite adverse growing condition in many areas. While short-term oversupply in some areas will lead to lower prices, the market will adjust to the new reality.

What will suffer, however, is the long term investment in technology for producing more food at lower prices.  The growth of the population on the planet will put increasing demands on the agricultural systems.  The United States has been the leader in large scale agricultural production as well as the implementation of new processes and technologies to expand the productivity of the land.  If the financial incentive to innovate goes away because of lessened demand due to tariffs, so will the continued investment in the future of food production.  That will hurt countries struggling with food insecurity.  There are no winners in a trade war.