SCOTTSBLUFF, Neb. - (KNEP) - A Social Science Professor at Western Nebraska Community College believes the Panhandle will see a negative impact from the tit for tat tariffs.
Source: MGN Online
Dr. Royce J. Ammon states it’s a little too soon to see the severity or the prolonged impact the tariffs will have on Western Nebraska’s economy but believes the area is already seeing some impacts.
He and his wife come from a long list of ag producers in the state with his wife’s family coming from the Panhandle. Dr. Ammon stated Western Nebraska economy is based off three main commodities; soybean, wheat and pork.
The ag industry as a whole in the U.S. provides 24 million people with jobs and exports $100 billion dollars.
Dr. Ammon stated in the current growing season for soybeans exports to China have dropped 85% below what it was this time last year. He continued by adding that as much as 50% of annual wheat production is to international countries including China and pork saw a 29% decrease last year.
Looking at the country-wide scope of things, the current tariffs reduced the economy by $30 billion dollars and if another round were to be placed on China it could further reduce the economy another $15 billion dollars.
He adds that ultimately the real effects from the tariffs won’t actually be felt for another 3-5 years. Dr. Ammon also added this will all have a direct impact on income while adding a multiplier effect to other sectors or industries.
Nebraska farmers are also being hit by the tariffs on steel that have been imposed. Dr. Ammon cited JP Morgan Chase who significantly downgraded the John Deer stock. That company is forced to place higher price tags on equipment to offset their costs on the steel commodity.
Dr. Ammon stated in 2013 the income for farmers in the U.S. as a whole was $123 billion dollars but last year it dropped nearly 50% to $63 billion dollars. He is hearing that some farmers feel this year’s crop season is a make or break time for them. Some are not able to get help from financial institutions. He is also seeing other farmers could seize business operations because it isn’t a viable market. Dr. Ammon also cited the growing list of farmers who are applying for bankruptcy.
His biggest fear comes from historical knowledge. In 1930 the Smoot Hawley Tariff Act was signed which was the highest tariffs the U.S. imposed. It deepened and elongated the Great Depression. Dr. Ammon added just four years later 66% of the world trade dropped.
Dr. Ammon believes it will take three to five years to fully see the impact of the tariffs on Western Nebraska’s economy. He added economists are projecting an average household of four people will spend an extra $2,300 in the next 12 months as a result of the tariffs. Dr. Ammon added that any potential benefit people would have received from the Tax Bill in 2018 has already been erased.
As for what farmers should do now to protect themselves for the future, Dr. Ammon only wishes he had the answer. He hopes he is wrong in that the Western Nebraska economy will see a down turn but it is too early to tell.