President Donald Trump’s stated desire to acquire the island of Greenland has caused tension with European nations that could result in a tariff war that would harm North Carolina farmers.
Trump recently warned that eight European nations could face increasing tariffs if a deal wasn’t reached to allow the U.S. to acquire the semi-autonomous territory of Greenland.
According to Trump, the tariffs would increase over time if no deal is reached, starting at 10 percent on Feb. 1 and climbing to 25 percent on June 1. The nations targeted with these tariffs are Denmark, Norway, Sweden, France, Germany, the U.K, the Netherlands and Finland, and the new tariffs would be in addition to current tariff rates that include 10 percent for the UK and 15 percent for all nations in the EU.
In response, the EU Parliament is not only considering a reported $108 billion worth of tariffs on American-made products, but also other measures such as restricting American producers’ access to the European market.
If this plays out, the negative consequences for North Carolina farmers could be devastating.
The John Locke Foundation earlier this month published a report that estimated the possible implications of different trade war situations on North Carolina’s agricultural industry. Because a significant amount of agricultural products grown and raised in North Carolina are exported to foreign countries, reduced access to foreign markets would cost farmers sizeable amounts of revenue and jobs.
Specifically, North Carolina’s soybean industry would be especially harmed, because the EU is the third most popular foreign market for North Carolina soybeans. Additionally, according to the report, 86 percent of cotton, 67 percent of tobacco, and about half of the sweet potatoes grown in North Carolina are exported to foreign countries, exposing those industries to heightened risk from a tariff war with the EU. Europe is the number one export destination for North Carolina sweet potatoes.
In sum, several agricultural products may lose tens of millions in revenue, and thousands of jobs, in the event Trump’s threatened tariffs prompts a response from the EU. Ripple effects from those losses would spread throughout rural North Carolina counties, magnifying the economic pain in areas already struggling.
In just a couple of weeks, the projected financial losses to North Carolina agriculture from a trade war included in the report went from speculative to very real. Let’s hope cooler heads prevail.
