U.S. ag trade deficit widens

The U.S. ag trade deficit has widened to $32 billion and a University of Missouri Extension Specialist in Ag Business and Policy says there are many factors at play.

Ben Brown says when there’s a trade deficit it’s easy to think U.S. agriculture isn’t being competitive globally, but “I’m not sure trade deficits signal the end of exports are coming for U.S. ag products. It just means we’re importing more than we’re exporting.”

Brown says consumer preferences and economic strength are two important factors and right now, the U.S. is importing more consumer goods.

“That component right there is sensitive to the strength of the U.S. economy. We’ve seen consumers continue to spend and buy products broadly across all sectors. That also applies to the food, beverage and ag sector.”

USDA says ag imports for the current fiscal year are at $202.5 billion with an increase in horticulture, livestock and dairy product imports.

U.S. ag exports for the current fiscal year remain unchanged from USDA’s February estimate at $170.5 billion. USDA says ethanol, dairy and livestock exports have offset reductions of grains, oilseeds and other products.

Mexico is now expected to be the largest export market for U.S. agriculture, followed by Canada and China.

“China came in recent years and have faltered back. We wonder if that’s a blunt of their growth and relationship with the United States or was it because they needed products during certain times. People will debate that a long time.”

Brown says new free trade agreements, reducing non-tariff trade barriers and other things can help eliminate trade deficits “but do they necessarily make economic sense? That’s aways the hard part of that equation.”

Read the trade outlook report from USDA.

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