The United States trade deficit is a common subject of policy discussion. However, not as often do we hear of the trade surplus the United States enjoys in the agriculture sector. What does this mean? Simply, the U.S. sends out more in exports that it receives in imports. Therefore, agricultural trade increases the United States’ Gross Domestic Product (GDP), while other sectors of U.S. trade decrease GDP. In 2016 the USDA’s Economic Research Service, reported an agricultural trade surplus of $20.3 billion. (See Figure 1) There are very few sectors of U.S. trade that, like agriculture, are “in-the-money” so to speak. The United States, in total trade, is a net importer with a trade deficit of $48.5 billion reported by the U.S. Census Bureau this month (3/2017). Thus, as the Trump Administration begins trade talks, the value of agricultural trade must be clearly understood to promote continued export strength to our main trade partners, while also increasing opportunities elsewhere.
To offer a more specific understanding of what these billions of trade dollars mean on a granular level, here is how it breaks down: On average, farms in Iowa, the second largest exporting state, receive $127 thousand of export value per year. Exports not only help the Iowa economy; they are in influential driver of Iowa agricultural production. (See Figure 2)
Over the next several weeks we will be posting articles giving an overview of U.S. and Iowa-level trade with Canada, Mexico, China, and Japan. As NAFTA and other trade talks will begin later this year, understanding the impact and background to these trade relationships is valuable to not only legislators and policy makers, but to all involved in the agriculture industry, especially Iowa's farmers. The role of Iowa as a global agricultural leader is significant and involvement in these decisions starts at the grassroots, and affects all producers and consumers alike.
Preston Lyman is a Research Analyst with Decision Innovation Solutions (DIS). DIS is an Iowa-Based economic research firm which provides regular farm economics research and analysis to the Iowa Farm Bureau staff and members.
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