Yeutter Institute experts explain trade impacts on Nebraska ag producers

As international trade issues receive growing attention, it is important for Nebraskans to understand the ramifications for the state’s ag sector and overall economy. The Clayton Yeutter Institute of International Trade and Finance is uniquely positioned to meet that need.

The institute, named after former U.S. Trade Representative Clayton Yeutter, stands out for its multidisciplinary approach encompassing agricultural economics, law, business and policy making.

Three of the institute’s faculty chairs have written a report examining the economic ramifications and legal background for U.S. tariffs recently imposed on China, Mexico and Canada. 

Those U.S. trade actions are separate from the administration’s recently announced intention to study and later impose “reciprocal tariffs” on individual countries, depending on their level of tariffs and non-tariff barriers. 

“The administration is signaling that it intends to make trade policy an ongoing, high-profile part of its agenda, connected to overall economic policy,” the institute said. “Decisions will impact businesses, farmers, consumers, the economy and the trading system.”

Understanding the multiple issues involved in the administration’s trade actions “requires legal, economic and diplomatic lenses — an approach that defines the Yeutter Institute,” the report said. 

The new U.S. tariffs on goods from China, Mexico and Canada can be expected to erode the export competitiveness of Nebraska’s ag sector and decrease its access to export markets due to trading partners’ retaliation, the Yeutter analysis found. 

Increased U.S. tariffs on crude oil imports from Canada and Mexico, for example, would increase the cost of all refined fossil fuel products in the U.S., wrote John Beghin, Mike Yanney Yeutter Institute Chair and professor of agricultural economics. New U.S. tariffs would also affect fertilizer prices, since the U.S. imports most of its potash from Canada. 

The tariff on China imposed Feb. 4 by the administration is likely to produce a negative economic impact on the U.S. larger than that during the 2018 U.S.-China trade war, wrote Edward Balistreri, Duane Acklie Yeutter Institute Chair and professor of economics. The new U.S. tariff action not only broadens the set of Chinese goods subject to the trade tax, but has triggered China’s trade retaliation on U.S. energy goods, motor vehicles and agricultural equipment.

The Trump administration is breaking new legal ground by basing the new tariffs on a 1977 law, the International Emergency Economic Powers Act, not used previously for tariff justification, wrote Matthew Schaefer, Clayton Yeutter Chair and professor at the University of Nebraska College of Law. 

As a result, any legal challenges are likely to face an uphill climb, since U.S. courts have traditionally given very wide latitude to presidential actions under the 1977 law, Schaefer wrote. 

Nebraska’s economic well-being is closely connected to the global marketplace. The state ranks fifth as an agricultural exporting state, with $10 billion in sales abroad in 2022. Overseas sales account for about 30% of the state’s total agricultural receipts, according to the Nebraska Farm Bureau. More than half of the state's soybean crop is sold outside the U.S. 

The institute’s interdisciplinary approach stems from the experience of Clayton Yeutter (1930-2017), a Eustis, Nebraska, native, for whom the institute is named. He earned three degrees from the university: a Bachelor of Science, law degree and doctoral degree in agricultural economics. His career encompassed the private sector, as president of the Chicago Mercantile Exchange, as well as agricultural economics and government service as U.S. secretary of agriculture and U.S. trade representative.

The institute is part of the university’s Institute of Agriculture and Natural Resources.