Would TPP Hurt or Help Farm Equipment Dealers?

Last week, President Trump signed an executive order that pulled the U.S. out of the Trans-Pacific Partnership (TPP). It’s important to note that while the trade deal had been negotiated, it had never been ratified. While the executive order makes good on Trump’s campaign promises, I find myself wondering if it’s any good for the U.S. ag economy and more specifically farm equipment dealers. The American Farm Bureau Federation would argue it’s not.

According to Farm Bureau estimates, “annual net farm income would increase by $4.4 billion, driven by an increase of direct U.S. agricultural exports of $5.3 billion per year upon full implementation of the TPP agreement as compared to a scenario in which the U.S. fails to pass the agreement while the remaining member countries proceed apace.”

Anytime farmers’ income is going up, it’s generally good news for farm equipment dealers. The deal would have a positive impact on U.S. beef, pork, poultry, rice, cotton, butter, cheese, non-fat dry milk and fruits and vegetables, according to the Farm Bureau. The companies included in the TPP are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. It would have included the US if it had been ratified.

I reached out to Natalie Higgins, Equipment Dealers Assn. vice president of Government Relations, to learn more on EDA’s take on the news. She says while the association’s official policy is to support free and fair trade, it did not officially endorse or oppose TPP as an association.

She says, “Our dealers have such a varied customer base: some of those customers would benefit from TPP while some would lose out. It is very hard to know what this means now as far as North American trade. There are concerns this will embolden China to cut its own deal and alienate U.S. traders from the Pacific region. Conversely, President Trump believes it may strengthen the U.S.’s negotiating position for future deals. Only time will tell, but EDA will continue to actively monitor this situation. As with most agriculture issues, dealers prosper when their customers prosper.”

While a large part of the concern with TPP is China (who is not part of the agreement), trade with the country does go both ways. According to the latest report from the Assn. of Equipment Manufacturers on exports of U.S.-made ag machinery, China is one of the top 10 countries buying the most equipment from the U.S. In fact, China comes in at number 5, accounting for $156 million during the first three quarters of 2016. That’s a significant amount of money, but it’s down 66% from year-ago numbers. Closing the door on trade with China could see that number continue to fall.

Use the comment section below to weigh in on how you see trade deals like this impacting your dealership, or the U.S. ag economy as a whole. There are a lot of sides to this story, and we want to hear yours.