Despite bright moments for the United States’ foreign trade policy earlier this month, an escalating trade war with China — a growing market for Wyoming goods and services — is presenting significant concerns for Wyoming industry.
Since President Donald Trump’s administration first threatened tariffs against China over what it perceived as unfair trade practices and treaty violations, tensions between the two countries have begun to escalate, resulting in restrictions and tariffs on billions of dollars on goods and services between two economic powerhouses.
Those tensions have not gone unnoticed in states like Wyoming, which — like many states — has come to thrive and die by the whims of international trade policy.
While China is not Wyoming’s most significant trade partner, it is a major one: According to a fact sheet from the Business Roundtable, Wyoming exported $37 million in goods and approximately $57 million in services to the People’s Republic in 2017 while importing significantly more.
According to a fact sheet co-authored by advocacy groups Americans for Free Trade and Farmers for Free Trade, Wyoming businesses have paid an extra $8.9 million in import taxes since the Trump administration first imposed the tariffs, including $1.2 million in March. Meanwhile, Wyoming’s exports have faced $1.2 million in new retaliatory tariffs since January.
The issue is only anticipated to get worse. In response to a hardline tariff strategy by Trump, China announced approximately $3 billion in new tariffs on American agricultural products last week, threatening more if the United States refuses to roll back tariffs it has imposed on China. Trump this week announced $16 billion in relief for farmers who are being hit hard by the trade war.
Much of the impact will be felt in Wyoming, whose beef industry has recently begun to make inroads in foreign markets like China’s.
“(The tariffs) are significant to agriculture,” Gov. Mark Gordon told the Star-Tribune last week. “As you can tell from the conversations I’ve had about coal, I’m generally in favor of open ports and open policies. I’ve worked hard to get beef back in Korea and lamb back in Japan, and I would hate to see that loss. China is an enormous marketplace, obviously, in our foreign trade, and Wyoming products are valuable.”
Meanwhile, Chinese markets have begun to look elsewhere, digging a hole for U.S. trade that some say could take years to recover from.
“The real impact is that we’re losing the foothold we were gaining,” said Brian Keuhl, the co-director of Farmers For Free Trade and a 20-year Sheridan resident. “We haven’t sold that much beef to China, but it was notable that we had just recently cracked that market open and had begun to sell beef there.”
“When we’re not trading, someone else is, and when the trade war ends, things don’t just go back to the way they were,” he added. “We don’t immediately start trading goods. Trade is not a light switch.”
Wyoming and the world economy
Free trade agreements have been increasing in importance for Wyoming in the years since the Great Recession.
Since 2007, Wyoming has experienced a 17 percent rise in exports with free trade agreement countries while, overall, exports have slightly outpaced the national average. According to Wenlin Liu, chief economist at the Wyoming Economic Analysis Division, Wyoming’s exports grew 50 percent versus a national increase of 42 percent over the last decade largely due to the success of a single product: soda ash, a product whose success correlates largely with the prospects of other nations’ economies.
Meanwhile, the state’s goods exports to Canada and Mexico have increased by $186 million (465 percent) since the North American Free Trade Agreement went into effect in 1994.
However, those trade relationships have hit rocky shoals lately. Trump — in efforts to renegotiate NAFTA — has thrown trade relationships over hundreds of products into uncertainty, while spats with other foreign powers have created unprecedented levels of uncertainty for American producers.
“Markets want certainty,” Kuehl said. “If you’re going to make investments — whether you’re a farmer deciding what seed you’re going to plant or what equipment to buy, or whether you’re an exporter deciding to buy a new barge or put in a grain elevator — you need certainty to make capital investments. And what we’ve had for the last two years has been uncertainty.”
A light at the end?
American producers, particularly in Wyoming, were heartened to learn earlier this month that nations like Japan — which had long-imposed restrictions on American beef — would be lifting those sanctions, while American tariffs on iron and steel — raw materials relied on for the state’s oil and gas industry — from Mexico and Canada would also be lifted.
But there’s plenty left to do.
While farmers across the nation are seeing substantial losses due to the president’s trade war — prompting the announcement of billions of dollars in bail-out funds from the U.S. Department of Agriculture this past week — Trump urged America’s ranchers and growers to make “patriotic” sacrifices in his administration’s efforts to beat China into submission.
These claims were echoed by Wyoming Sen. John Barrasso who, two weeks ago, went on Fox Business to say he largely agreed with the president’s methods of using tariffs and retaliatory measures as a negotiating tactic with China.
“In Wyoming, fair and open access to export markets is critical for several of our products including beef, soda ash, natural gas and coal,” Wyoming’s junior senator told the Star-Tribune in a statement. “It is important for us to be able to trade. The president is right to hold China accountable. We know that they cheat. I’m confident that the president and his team will continue negotiating a trade deal that makes sense for America.”
“Our economy is very strong and we don’t want additional tariffs or a prolonged trade war with China to stifle economic growth,” he added. “We need a fair, responsible deal that levels the playing field for America’s agriculture communities, families, workers, and businesses.”
Gordon had a similar perspective.
“Being a part of that industry, we fully support that America cannot be entered into trade agreements that are not at least mutually beneficial, but actually hamper our country,” said Gordon, who owns a ranch in Kaycee. “I think most people in the agricultural industry will understand that.”