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Louisiana economy may suffer from effects of trade war

Louisiana's economy may continue to struggle as the state's ports continue to see a decline in shipments due to tariffs.

Bivalet | Bigstock

The United States imposed a 25 percent tariff on $50 billion worth of Chinese exports, and China has promised immediate retaliation with tariffs on U.S. products, including soybeans, corn and wheat.

Trade tensions between the two countries worsened in April, and quarrels between the U.S. and its allies Canada, Mexico and the European Union have heightened in recent weeks.

The American Soybean Association and The National Corn Growers Association have reached out to members of Congress and the Trump administration in efforts to share their concerns for America’s crop growers. They have even started a campaign called #TradeNotTariffs

Louisiana concern

While livestock producers and crop growers continue to worry about the value of their product, Louisiana residents may fear for the state's economy. Most U.S. grain pass through the state on the Mississippi River. The state has 30 ports, including the largest one in the U.S. Due to the abundance of ports, Louisiana is in a unique situation when it comes to these tariffs.

According to the Census Bureau, 46 percent of Louisiana’s exports went to China in 2017; 33 percent went to Mexico. About 60 percent of farmers' exported soybeans, corn, wheat and rice pass through the South Louisiana port that spans 54 miles from Baton Rouge to New Orleans.

Bloomberg reports that, according to Harbor Intelligence, in the first quarter, the amount of traded goods has drastically declined along the Port of South Louisiana. Animal feed exports have declined 31 percent from the same time last year, soybean exports are down 20 percent, and imports of chemicals and fertilizers have been cut in half.

This is a concern for the approximately half-million Louisiana citizens that count on the ports for employment, the Bloomberg report said. As shipments of goods decrease, naturally jobs will too.

Trump support remains high in Louisiana despite the tariffs. The state voted Republican in 2016.

Livestock producers impacted too

Livestock producers are also feeling the burden. “Trade is on everyone’s mind,” said Jim Heimerl, National Pork Producers Council president, at the 2018 World Pork Expo this month.  

“Mexico put tariffs on U.S. pork. That follows a 25 percent additional duty China put on April 2. Those moves were retaliation for U.S. tariffs placed on steel and aluminum," said Heimerl.

Heimerl referenced Iowa State University agriculture economist Dermot Hayes when explaining that, since March 1, hog futures have dropped by 18 dollars per head.

“That is a $2.2 billion industry loss on an annualized basis,” Heimerl said.

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