New Mexican tariffs that went into effect June 5 target U.S. cheeses, cranberries, apples and pork, among other agricultural exports. Tariffs announced this month by China also include agriculture, affecting soybeans, pork and a wide array of dairy products, making it harder for U.S. companies to compete in the world’s largest country.
These tariffs could become a problem for the U.S. economy and a bigger problem for California, especially in rural areas. The state is the country’s No. 1 exporter of agriculture, with $20 billion in annual sales. No other state comes close. No. 2 Iowa exports less than half that amount.
These are big and fragile numbers. If exports sneeze, California agriculture catches a cold, and the state economy takes a hit.
Some erroneously think agriculture has diminished to a small slice of America’s economic pie. It hasn’t, especially when you factor in the ripple effect to truck drivers, grocers, food scientists and other workers.
Consider these facts about food and agriculture from the trade association website, Feeding the Economy:
• One out of four U.S. jobs connects to food and agriculture.
• Wages add up to nearly $2 trillion.
• Food and agriculture account for one-fifth of U.S. economic activity.
• Exports totaled $146 billion.
• This activity generates $894 billion in federal, state and local taxes.
Those are national numbers. In California, food and agriculture support more than 5 million jobs. The state economic impact of exports alone is nearly $24 billion.
The United States has an overall trade deficit of about $46 billion, a source of concern for President Trump and others. But it’s important to note that U.S. agriculture, led by California, has created a trade surplus every year for more than 50 years.
The dairy industry I now represent illustrates agriculture’s underappreciated impact.
U.S. Dairy contributes $628 billion to the U.S. economy and generates $64 billion in tax revenues. We support 2.9 million jobs, according to Dairy Delivers, the International Dairy Foods Association’s economic impact tool. We provide state-by-state data and more at GotDairyJobs.org.
It wasn't long ago that few dairy products left the state, much less the country.
Today, milk from one out of seven tankers leaving American farms goes into products and ingredients sold overseas. We want to increase that to one out of five, keeping dairy farms in business. More than 95 percent are family-owned.
U.S. dairy exports hit $5.5 billion in sales last year. Our exports in the first quarter of 2018 surged, breaking volume records. The tariffs create a cloud of uncertainty the rest of the year.
We can compete with anyone, anywhere in the world, if the playing field is level.
That’s why we support modernizing the North American Free Trade Agreement (NAFTA). President Donald Trump is correct when he tweets Canada puts an outrageous 270 percent tariff on some of our dairy products. That’s not free trade. It’s a tilted playing field.
Let’s fix that problem while preserving parts of NAFTA that have worked so well with Mexico.
This week, more than 60 dairy organizations sent a letter to the president asking him to suspend steel and aluminum tariffs on Mexican products until NAFTA 2.0 becomes a reality.
Agriculture is the solution to the trade deficit, not the problem, especially in California, the country’s leading agricultural export state.
Former U.S. Agriculture Secretary Tom Vilsack is president and CEO of the U.S. Dairy Export Council. Reach him at Reach him at @USDairyExporter.