Are Exports Falling in Minnesota Due to the Trade War?

U.S exports comprise a little over 12% of the nation’s GDP as of 2017. A shock to this cohort of production would be a significant blow to the economy over the mid-term. What I’m interested in, is the question of whether since then, given the ongoing trade war, Minnesota’s exports have dropped. Well, in aggregate, MN’s exports fell by 4% between Q2 2018 and Q2 2019. Meanwhile, U.S. exports as a whole fell 3% during that same period. This means that Minnesota is experiencing above average negative shocks to the export contribution to the state GDP.

A fuller picture reveals that while in total exports have fallen, MN exports have decreased in some regions while falling further in others. From MN DEED:

“Minnesota exports fell in North America (down 6%), Asia (down 4%) and Central & South America (down 19%). However, exports increased to selected nations such as Japan (up 6%), Germany (up 8%) and Australia (up 18%).”

Since we know that in aggregate exports fell, the gains we’ve seen in Japan, Germany, and Australia are small fish compared to the staple trading partners like China. It’s no secret that the trade war has impacted farmers significantly. As a mitigation measure, the Trump administration has provided aid packages to farmers in hopes to stabilize the trading patterns of the U.S. agricultural industry. Unfortunately, the aid is directed toward the wealthiest of farmers, leaving private, family owned farms behind.

According to The Environmental Working Group:

“An EWG analysis found that the top one-tenth of recipients received 54 percent of all payments. Eighty-two farmers have each so far received more than $500,000 in trade relief.”

The profound discrepancy in aid relief illuminates a larger pattern exhibited by this trade war. There are real, meaningful consequences borne by Americans based on the policy, and posture of the Trump administration. Minnesota is an agricultural state, with a robust farming community which as long supported the urban core. It behooves the policy makers of MN to set expectations, and to create a lasting pattern of stability when it comes to the MN export economy. This is the charge of our representatives in the coming years.

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