Is the Trade War Impacting Minnesota?

I came across a post on MN DEED today, which said that MN exports dropped 2% in the third quarter 2019. My first reaction was that, of course, Minnesota is an agricultural exporter, and the ongoing trade war with China is having some effect on Minnesota farmers. The article goes on to say that during a 12 month rolling period exports to Asia dropped 4%(again makes sense) and also declined by 21% in South America.

So what’s going on here? Is it actually agriculture that is driving this decline? Evidently not:

Source

Food By-products aren’t even in the top 5 of total MN exports. Optics and medical(products and devices) were up 4% during the last 12 months, and were even up 18% to China. Since this is a largest export category, growth here seems to be saving our asses.

How is Minnesota faring compared to our midwestern neighbors?

Not too bad. The picture on the right shows that MN exports have declined the least out of our immediate neighbors, with ND declining a whopping 18%. I looked for quite a bit for a similar site like MN DEED but for North Dakota and couldn’t find anything. In fact, the closest fact I found was that ND was 9th in agricultural exports as of 2017. Perhaps the trade war is disproportionately affecting ND, causing the 18% drop? Can’t say for sure.

What I can say is that the data tells us that while MN farmers may be impacted in the “other category” as shown in the first chart, the bulk of MN export declines are not related to agriculture. What exactly is China placing tariffs on? Well, let’s take a look:

Source: Brookings

And wouldn’t you know it, plastics, at the top of this list, was the largest decrease in export categories for MN.

The point of this post is not to say that farmers are not being impacted, they are and the trade war is not actually doing anything for the U.S., especially the resulting agreement which is pending between the U.S. and China. Really, this post is about my presumption of the effect hits to agriculture would affect our export portfolio. From the export data at least, it looks as though Minnesota has diversified its exports more effectively than our neighboring states. We don’t rely on one or two dominant sectors, like in the case of North Dakota. This post also serves as a reminder that trade wars affect each state differently, and the recent trade conflicts with Chile and Brazil could have a much different affect on MN and other states than the trade war with China.

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