The empire strikes back
Should it be Smoot-Trump or Trump-Hawley?
“It seems to be pretty measured and proportional. They didn’t seem to overreach, and they didn’t hit our big-ticket items like planes and soybeans.”
—Wendy Cutler, former U.S. trade official, in Tuesday’s Arkansas Democrat-Gazette
THAT WAS Tuesday. Things, including the news from the far east, were much different when the dawn broke over Arkansas 24 hours later.
Mrs. Cutler was quoted by the Associated Press, over in the Business section of your paper, in a story that assured We the People that Red China’s retaliatory tariffs wouldn’t harm real folks much. After all, it was just a few billion dollars. Mainly levies on pork and apples. And since President Trump’s announcement that America’s tariffs on Chinese products would approach $50 billion, maybe America was winning! And great again. Or getting there.
But, as these things often do, the tariff back-and-forth got worse. By Wednesday, word coming from Beijing was that it ramped up its tariffs on American products to $50 billion as well. Including beef and soybeans, to go along with the pork that Arkansas farmers ship to mainland China.
We expect pork and beef to continue its comeback in Arkansas after that drought of 2012-13. The Natural State is still in the top half of states producing those products. But soybeans? We’re ranked in the Top 10, no matter who’s doing the ranking. To use Mrs. Cutler’s phrase, it’s a big-ticket item in these latitudes.
If you eat, soybean is in your diet. And not just in tofu. The magic little bean is used to feed all those cows, pigs, chickens, and farm-grown fish. And somebody said that every third row grown in this country is sent to mainland China.
The ChiComs are said to be the biggest buyer of soybeans from Arkansas and these other, lesser states. To the estimated tune of $14 billion a year. The ripples of President Trump’s splendid little trade war might be felt far and wide. Marketwatch.com says that depressed soybean prices “could mean less expensive soybeans purchased domestically, including cheaper costs to feed domestically raised livestock.” But, it notes, that could also mean America’s farmers might scale back production.
And should that happen, the law of supply and demand would mean higher prices at Kroger. Also, tariffs on soybeans could increase costs for Chinese hog farmers, increasing the price of imported pork here. Ay-yi-yi.
The Farm Bureau opposes the tariff spat. The auto industry opposes the tariff spat. Republicans and Democrats oppose the tariff spat. And, as you’d imagine, the American Soybean Association really opposes the tariff spat. Hear John Heisdorffer, its president:
“At a projected 2018 crop of 4.3 billion bushels, soybean farmers lost $1.72 billion in value for our crop [Wednesday] morning alone. That’s real money lost for farmers, and it is entirely preventable.”
Or it was. Until a certain somebody announced via Twitter that he’d single-handedly stop this recovery in its tracks.
No doubt the Chinese understand American politics well enough, and know that the farm belt holds a large part of President Trump’s base. This is surely their way of getting the president’s attention. And the rest of us out here in flyover country.
Attention has been got.
THERE MIGHT be a bit of good news in all this. That is, for all the talk of tariffs and levies and imports, there has been no date announced for implementing them. Even the usually precise Chinese didn’t offer a date for retaliatory action. And from what we all know of the tweeter-in-chief in Washington, his mind can be changed by the last person to talk to him. His SOP seems to be the U-turn. Some entrepreneur has put contradictory tweets by Donald Trump on flip-flop sandals and is selling them online. What a country!
So there’s a possibility, and not a small one, that the president’s talk of tariffs is only that. And after outcry by both political parties in this country, complaints from his political base among auto workers and farmers, a few experts on morning cable shows explaining things, and the Chinese pointing a loaded tariff at the farm belt, the president might change his mind again.
Our considered editorial opinion: The president should listen to his advisers or read something about the Smoot-Hawley Tariff Act of 1930. It’s a great example of how tariffs affect the global economy.
An example not to follow.