Tariffs impact Wyoming businesses, economy

Cheyenne – As business opportunities continue to expand in the state of Wyoming, the subject of tariffs and global trade was a topic of extensive conversation at the 2018 Wyoming Governor’s Business Forum

“Over the past few years, we’ve seen a variety of twists and turns in U.S. policy related to international trade,” said Gregory Pulliam of XTO Energy. “This is extremely relevant in that Wyoming’s economy is an export economy. From natural resources to agriculture, others are using Wyoming’s products, powering jobs for Wyoming’s citizens.”

A panel including Canadian Consul General Stéphane Lessard, Consul General of Mexico Berenice Rendon, National Cattlemen’s Beef Association (NCBA) Senior Vice President of Government Affairs Colin Woodall and Puma Steel President Rex Lewis discussed the implications of trade and recent trade agreements in a discussion moderated by Wyoming Stock Growers Association Executive Vice President Jim Magagna. 

“Twenty-five to 30 years ago, or even just 10 years ago, a conversation of trade and tariffs would likely not have risen to this level in the state of Wyoming,” Magagna said. “We have historically produced a lot of raw products and sold them to someone else. They may have been exported to other countries, but we weren’t the exporters and we weren’t necessarily concerned about the trade policies.”

He continued, “I think this is a sign of positive change in Wyoming and the positive direction that we’re headed today, we are looking at being an exporter.”

Magagna cited products including soda ash, coal, liquified natural gas or even beef to countries around the world. 

With a broad list of products with export potential, he said, “We’re seeing ourselves as a new player in the trade arena.”

Beef industry

Of particular interest to Wyoming, Woodall noted trade is essential to the U.S. cattle industry. 

“It’s important because of what we produce,” Woodall said, noting every part of the beef cow is used, but Americans don’t want all the products produced. “For example, every day, we are processing beef tongues, and they have to go somewhere. If we’re not going to eat them, who is?”

Woodall said in many cultures, beef tongue is seen as a delicacy, and consumers will pay a premium to access the American beef tongue, hearts, livers and kidneys that Americans aren’t interested in buying.

“These products are a vital part of the value of the beef carcass that is produced every day,” he commented. 

In addition, the increasing size of the middle class means that people have more disposable income.

“History shows us when people have more income, they eat better, and that means eating protein,” Woodall explained. “We want people eating more American beef.”

In 2018, beef exports reflect that desire for American beef. From January to September 2018, U.S. exports were 18 percent above 2017, for a value of 13.5 percent of overall beef production.

“In the grand scheme of things, this has a tremendous impact on the value that cattle producers have for their cattle,” he said. “Export markets have really helped the cattle industry to stave off price declines.” 

USMCA

Two particularly important markets for the U.S are Mexico and Canada, which have governed under U.S.-Mexico-Canada Agreement (USMCA),  the successor of the North American Free Trade Agreement. Negotiations for the agreement started in August 2017, and the USMCA was announced in fall of 2018.

“This is a more modern agreement, and its great virtue is it preserves largely tariff-free trade, which allows our businesses to do what they do best – preserving jobs, prosperity and the great way of life in our countries,” Lessard said. “Really, it continues to create more opportunities for businesses and for consumers to have access to quality products at affordable prices.” 

Woodall noted a lot of work is necessary to complete USMCA, but the agreement is positive for the U.S. beef industry. 

Tariffs

While the agreement makes positive progress, Lessard said steel, aluminum and lumber tariffs have presented one stumbling block. Tariffs instituted by the U.S. were reciprocated by Canada.

“These tariffs are harmful for businesses, to each of us as consumers and to our continued prosperity,” he said, noting tariffs hamper the ability of North America to become the economic powerhouse of the world. 

Lessard added, “USMCA is the big thing we needed to get right. We’re on our way to ratifying it, and it will be a win-win-win for all three countries.” 

NCBA President Kevin Kester said, “With the signing of USMCA, U.S. beef producers are one step closer to knowing that unrestricted, science-based trade will continue in North America. The agreement brings the trading relationship with our neighbors into the 21st century – and clearly rejects the failed beef and cattle trade policies of the past. Open markets have helped U.S. producers flourish and created billion dollar markets for U.S. beef. We look forward to working with Congress to get USMCA passed into law as quickly as possible.” 

“We need to do everything we can to take down non-tariff trade barriers and make sure we have as much access as possible for trade,” Woodall added.

Look for more information on tariffs in next week’s Roundup, as these panelists continue their discussions on USMCA and its challenges.

Saige Albert is managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.