Minnesota

President Donald Trump has imposed tariffs that some economists believe will either harm the U.S. economy or give no benefit. McLeod County’s manufacturing and agriculture businesses, like those of the rest of the country, are navigating potential consequences to stay ahead of shortfalls.

Background

On June 1, Trump signed off on two proclamations the White House said address “the impairment to the national security threatened by imports of steel and aluminum,” modifying Section 232 tariffs for an additional 25 percent tax on imported steel and an additional 10 percent tax on imported aluminum from Mexico, Canada and the European Union. Mexico responded four days later with retaliatory tariffs valued at $3 billion worth of goods.

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Midwest manufacturing continued to grow in July, but effects from tariffs and other trade restrictions plus interest-rate hikes are starting to slow the pace, Creighton University reported Wednesday.

The widely watched Mid-America Business Conditions Index, which includes Minnesota, fell to 57 in July, similar to national statistics. It is the second consecutive month in which regional factory growth slowed. The index was 67.3 in May and 61.8 in June. In Minnesota, the July index declined to 55.8 from 58.8 in June.

Any index above 50 indicates growth, so economists were far from panicked by the results. It has been 20 consecutive months since economic growth fully contracted across the nine-state region.

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Many anxious American farmers are delaying purchases and investment while hoping for a truce in a U.S.-China trade war that has left their crops at a competitive disadvantage overseas.

The longer the Trump administration’s tariffs remain in place, the more China’s retaliatory tariffs against American exports stand to hurt U.S. soybean and pork producers.

President Donald Trump’s administration on July 6 carried out its threat to impose 25 percent tariffs on $34 billion worth of Chinese products, alleging that Beijing steals or pressures U.S. companies to hand over technology. China responded with similar duties on the same amount of U.S. imports – including soybeans and pork. The administration July 10 announced a second possible round targeting $200 billion worth of goods. Beijing vowed “firm and forceful measures” in response.

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A rush to get soybeans out of the country ahead of retaliatory Chinese tariffs caused a spike in exports in the second quarter as farmers and grain elevators hurriedly loaded trains and ships.

Then, sales slowed to a crawl.

“We’ve seen a downturn in orders for new crop,” said Bob Zelenka, executive director of the Minnesota Grain and Feed Association, which represents grain elevators. “We’re going to be probably sitting on some soybeans this fall in storage.”

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