A recent report from Iowa State University offers sobering findings that show why our country needs to resolve its tariff wars with China and other nations. The university researchers found that over the next year, the disruptions and loss of market share will cost the Iowa economy between $1 billion and $2 billion.

Iowa State’s Center for Agricultural and Rural Development used several analytical models and calculated the average loss for Iowa’s soybean industry at $545 million; for corn, $333 million; and hogs, $776 million. A projected fall in ethanol prices would cost the state’s ethanol producers about $105 million. Iowa is the country’s No. 1 ethanol producer, with Nebraska second. The Iowa State analysis cites additional costs: lost labor income ($245 million to $484 million, depending on how the Trump administration’s federal relief payments are handled) and lost tax revenue ($75 million to $110 million).

Those figures are the short-term cost. The long-term cost involves the possible loss of overseas markets, says John Crespi, an economics professor and interim director of the Iowa State rural development center.

“For farmers,” Crespi says, “the obvious question is, where and how much of your product will you sell this year and next year, and for what price? But the harder question is, what happens in two, three or 10 years if the trade wars continue? You could find that the U.S. loses so much market share that a decade from now, even if you get rid of the tariffs, the U.S. may be a smaller player.”

The Iowa State study points to two historical examples of how U.S. producers lost market share during past trade disruptions: European farmers stepped in and gained market share in the Soviet Union during a U.S. grain embargo in the 1980s, and in 2009, Brazilian and European poultry producers increased their market share in China in the wake of a U.S.-China trade dispute.

“History has shown that the world’s farmers don’t just sit back and wait for countries to settle their differences. They ring the doorbell and offer their products,” Crespi said. “The president of the Brazilian grain growers association recently met with Chinese traders, and the Chinese embassy in Brazil said discussing a Brazil-China futures contract has merit.”

Despite the recent U.S. trade agreement with Canada and Mexico, the Trump administration continues to impose steel and aluminum tariffs on the flimsy rationale of national security. And tariff conflicts with China and the European Union are unresolved.

Crespi is right when he says, “America’s farmers are always on the front lines of trade wars.” The Iowa State analysis shows the crucial need for our country to negotiate reasonable compromises that end the market disruptions and restore general stability to our foreign transactions.

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