With U.S. agricultural exports down, the White House touting a signing ceremony on a preliminary China trade text and the new North American Free Trade Agreement (NAFTA) up for a vote soon in the U.S. Senate, the Democratic candidates are likely to talk trade during Tuesday’s debate in Iowa. Below are key trade data points relating to Iowa.
On the China front, it remains to be seen if what the White House is selling as a “phase 1” China trade agreement will translate into changes in trade flows or China policies. The agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs. Meanwhile, the promise of one-time increased Chinese purchases of U.S. goods, including agricultural exports, that the administration is touting may provide elusive. Chinese purchasing agency commodity orders last week did not reflect a shift to U.S. purchases while Chinese officials have said they will not increase ag import quotas.
- U.S. Department of Agriculture data show that Iowa’s agricultural exports to the world have decreased 23% this year relative to last year –from $4.3 billion in the first 11 months of 2018 to $3.4 billion in the first 11 months of 2019.
- Iowa agricultural exports to the world are down 8% in the 11 months of 2019 for which there is U.S. government data relative to the same 11 months of 2016, Obama’s last year in office.
With respect to NAFTA, Donald Trump’s campaign promise to quickly replace the pact was stalled by his year-long refusal to remove new Big Pharma giveaways that would lock in high drug prices from the NAFTA 2.0 deal he signed in 2018. NAFTA 2.0 labor and environment terms also were too weak to counteract NAFTA’s outsourcing of jobs. Even after congressional Democrats and unions forced Trump to rewrite the 2018 deal, the new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump claims. The recent announcements by U.S. automakers of increased production in Mexico make that clear.
- During the Trump administration, the NAFTA trade deficit has grown 30% relative to the year before Trump took office.
- Meanwhile, the manufacturing sector has hit a wall in 2019: Manufacturing job creation nearly stopped while an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading since June 2009 financial crisis days.
- Tens of thousands more U.S. jobs have been government-certified as lost to NAFTA during the Trump era. Nationwide, the United States has had a net loss of 4.5 million manufacturing jobs – about 27% – since NAFTA and the WTO went into effect.
- The government has certified tens of thousands of Iowa workers as trade job-loss victims under just one narrow program called Trade Adjustment Assistance (TAA). This government program represents a significant undercount: Workers must know to apply and meet the TAA’s narrow criteria, which exclude many types of jobs lost to trade. The top five firms that TAA certified for China job loss in Iowa are Ocwen Loan Servicing, TMK-IPSCO, Lands’ End, Maytag and IMI Cornelius. The top five firms certified for NAFTA job loss in Iowa are Eaton Corporation, John Deere, GFSI, Intier Automotive Seating of America and International Automotive Components.
- Iowa metro areas Department of Labor-certified trade jobs loss:
Waterloo-Cedar Falls (3,342) Cedar Rapids (2,466)
Newton (2,195) Des Moines (1,878)
- According to the U.S. Department of Labor, manufacturing workers who lose jobs and find reemployment are typically forced to take pay cuts. Two of every five rehired in 2018 were paid less in their new jobs. One in six lost greater than 20% of their income. That means a $8,955 pay cut for the median-wage worker earning $44,800.
- During NAFTA’s 25 years in force, the U.S. goods trade deficit with Canada of $33.2 billion and the $2.9 billion surplus with Mexico in 1993 (the year before NAFTA) turned into a combined NAFTA goods trade deficit of $220 billion in 2018. Before NAFTA, the U.S. had a good trade surplus with Mexico and Canada in the top 10 products that Iowa exports to the NAFTA nations. We now have a massive $90 billion deficit in trade of those good with NAFTA nations.
- The $2.5 billion U.S. agriculture trade surplus with Canada and Mexico before NAFTA reversed to a $9 billion deficit in 2018. Nearly 250,000 small- to medium-scale farmers have been driven out of agriculture since the original NAFTA went into effect. Nationwide, $15 billion has been lost in U.S. agriculture exports just to China in the past year. Trump’s new NAFTA cannot fix this or stop future erratic and unpredictable Trump trade actions. Months after the deal was signed and boosters claimed it would lock in a new era of certainty in North American trade, Trump threatened to impose new tariffs on all Mexican imports for immigration-related reasons. Because the new NAFTA would simply continue NAFTA’s existing duty-free treatment with very modest increased access for U.S. dairy, poultry, eggs and wine to the Canadian market (around $400 million), it wouldn’t make a dent.
- Growing NAFTA trade deficit under Trump: The nearly 10% growth in the NAFTA goods deficit over the past 11-month period compared to that same period in 2018 continues a Trump-era trend: The 2018 annual U.S. NAFTA goods deficit was up 11% relative to 2017, an increase from $197 billion to $218 billion, and up 19% ($34 billion) in 2018 relative to the U.S. annual NAFTA goods deficit in 2016.
Data Notes: Deficit figures are adjusted for inflation to the base month of November 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to November 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau. The U.S. Department of Labor certifies trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.
For more information visit State-by-State Outcomes of NAFTA.