European nations now face a strong euro and could begin taking steps to weaken that currency. Should multiple nations employ that strategy simultaneously, it could lead to an environment conducive to trade-killing tariffs, Abbott says.
"What scares everybody is that this is reminiscent of the Great Depression," he says. "The United States imposed the Smoot-Hawley tariffs in 1930 and then other countries retaliated with tariffs of their own. Many economists believe it made the Great Depression more severe and last longer.
"One way you could bring about a double-dip recession is by adopting tariffs, which is what some people are talking about right now."
The devalued U.S. dollar will be good for the agricultural sector, Hurt notes.
"A weak dollar has a tendency to increase agricultural exports and, thus, increase farm commodity prices," Hurt says. "It means a favorable time for large exporting sectors like agriculture. There are good margins for the cropping sector right now. Producers should consider pricing the 2010 crop now and perhaps look at starting to price some of the 2011 crop, as well.
"They also should keep in mind that the last time we had a major escalation in crop prices was 2007-08, when we also saw a major escalation in prices of inputs. Fertilizer, in particular, is one input that most producers might like to get prices locked in for 2011 and 2012, as a weak dollar also tends to increase fertilizer and fuel prices."
Source: Purdue University