Montana could be caught in the spillover effects when China levies higher tariffs on U.S. products.
It’s another step in the ongoing trade war between China and the United States.
Last year, tariffs nearly knocked out Montana’s wheat exports to China.
The market has been less than stellar since, according to farmers in the state, which includes Lyle Benjamin, President of Montana Grain Growers Association.
“Naturally, that drop in sales has been tough,” said Benjamin. “It’s hit Montana hard in conjunction with the other trade uncertainties. It’s just an ugly time for Montana farmers and U.S. farmers in general.”
Montana State University economist Vincent Smith says the impact on Montana is both direct and indirect.
For example, farmers in the Midwest grow a lot of soybeans - more than farmers in Montana do, but tariffs on soybeans can end up affecting the wheat market.
“When corn prices fall, the prices for the lowest quality wheat in the United States tend to fall,” said Smith. “And that tends to have a ripple effect on all wheat prices, so wheat farmers in Montana do have a stake in the actions that China has taken to further restrict the export the agricultural commodities.”
Smith said beyond the net effect of the increased tariffs, the fact that the back-and-forth retaliatory tariffs continue without any kind of agreement is a significant problem.
“Like most economists, in fact all economists, I view trade wars as often unlikely to yield any long-run or even any short-run benefits,” said Smith.
Many farmers and agricultural groups want to see an end to the uncertainty.
This week, the Montana Farm Bureau sent a letter to the Trump Administration asking for as much. John Youngberg is executive vice president of Montana Farm Bureau.
“You know, we have stood with the administration in hoping to get better deals, but the pain is becoming real for a lot of folks now, and if we don’t have some kind of resolution soon, it’ll be severe in the farm community, so we need to have some resolution of this,” said Youngberg.
Political leaders in Montana also hope to see an end to the conflict.
Democratic Sen. Jon Tester has taken a strong stance and berated President Trump for the trade war and its effect on Montana farmers.
In a written comment to YPR, Republican Rep. Greg Gianforte said “no one wins with a trade war” and urged the president and administrative officials to come to an agreement. Republican Sen. Steve Daines’ office wrote that we need to be strategic and see fast results.
The proposed tariff increase goes into effect June 1.