Corn

Mexico is one of the top foreign buyers of corn from Nebraska and other states.

ERIC GREGORY, Journal Star file photo

A report released this week indicates Nebraska would be less affected by a trade war with Mexico than many other Midwestern states, but two of the state's top economists don't agree.

President Donald Trump has said he plans to renegotiate terms of the North American Free Trade Agreement between the U.S., Canada and Mexico. He also has floated the idea of a 20 percent tax on Mexican imports to help pay for his proposed wall along the U.S.-Mexico border.

Experts have said either one or both of those proposals could lead to a trade war with Mexico, which is the U.S.'s third-largest trading partner.

The report from personal finance website WalletHub ranked Nebraska 22nd, barely in the top half of states that might be affected by trade issues between the U.S. and Mexico.

Among the state's ranking higher than Nebraska were Missouri (Eighth), Iowa (10th), Illinois (13th), Kansas (18th) and South Dakota (19th).

WalletHub said it looked at five factors to come up with the ranking: exports to Mexico as a share of total state exports, exports to Mexico as a share of state GDP, imports from Mexico as a share of total state imports, imports from Mexico as a share of state GDP and share of jobs supported by trade with Mexico.

Creighton University economist Ernie Goss said he did not agree with the ranking, noting that nearly 20 percent of Nebraska's exports go to Mexico, considerably more than Kansas, Iowa or Illinois.

University of Nebraska-Lincoln economist Eric Thompson, who heads up the Bureau of Business Research, said the fact that the report does not consider the potential effects on the transportation industry means it "may be underestimating the impact on Nebraska."

Thompson said any regulatory changes limiting trade with Mexico or any other country will reduce economic growth in at least two ways: increasing the price and lowering the quality of goods available to purchase in the U.S. and reducing the productivity and competitiveness of American industry by disrupting global supply chains.

A third possible impact would be reduced overseas demand for exports if countries retaliate against U.S. trade regulations with regulations of their own.

Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

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