TIT-FOR-TAT
TRADE WAR THREAT FRIGHTENS TRUMP’S BASE OF MIDWEST FARMERS
FARMERS IN THE U. S. MIDWEST FEAR RETALIATION IF TRUMP FUELS A TRADE WAR,
Snow and sleet were falling on Eldon Gould’s 500 acres last week, but he was already looking ahead to planting season; depending on ground conditions and the temperature, that could be just a few weeks away.
But now the prospect of steel and aluminum tariffs was adding to the list of worries and uncertainties that come with every corn and soybean season.
“It’s the retaliation risk,” Gould said from his kitchen table in Maple Park, Ill., where farmland runs on for miles.
“The world’ s already awash in grain and then if you lose a key customer, it’s big. They’re going to go somewhere else to buy it.”
That’s a tangible threat throughout the Midwest, which accounts for roughly half the nation’s agricultural output, a prime target in any tit- for- tat response to the tariffs announced by President Donald Trump. Unlike the rest of the economy, farms deliver a trade surplus for the United States and a trade war could put barriers around lucrative markets.
Gould, 76, is a longtime Republican and like large numbers of f armers, he voted for Trump. But several of the president’s policy positions, like curtailing crop insurance, have run counter to agricultural interests — and perhaps none more than trade.
The country’ s overall trade deficit continues to irritate Trump. Last year, he withdrew from the nascent Trans- Pacific Partnership, challenged the authority of the World Trade Organization and insisted on rewrit-ing the North American Free Trade Agreement with Mexico and Canada — a pact that has helped lift American farmers’ fortunes at a time when low prices have eaten into their incomes.
In January, the president imposed tariffs on imported solar panels and washing machines. Then earlier this month, he announced a 10 per cent tariff on aluminum imports and a 25 per cent tariff on steel imports, excluding at least temporarily Canada and Mexico, but stoking confusion and outrage among some of the nation’s other biggest trading partners.
Some countries h av e talked about payback — in Europe in particular — and farmers in Illinois, Wisconsin and elsewhere are worried they will suffer from the fallout.
“The ag economy is not very good right now — fragile is the polite word for it,” Gould said.
His wife Sandy, across the table, jumped in: “It’s in the tank is what he means.”
Gould continued, “So then when you go to great lengths to upset some of your key customers, there’s reason for concern.”
Three out of every five rows of soybeans planted in the United States find their way out of the country; half of those, valued at $14 billion in 2016, go to China. Gould estimates 90 per cent of his soybeans are exported and 70 per cent of his corn, so what he calls Trump’s “trade antics” — particularly his criticisms of NAFTA — nag at him.
“It’s not only what happens today, but it’s the repu- tation of becoming an unreliable supplier,” he said.
Still, he’s not sure what will happen next and he thinks many farmers who supported the president are not yet ready to abandon him. “I think they’re going to wait and see how this thing plays out,” he said.
Farther north, in the tiny Wisconsin town of Dallas, where Andy Bensend grows soybeans on 5,000 acres, he is “guardedly optimistic” the tariffs won’t spill over and hurt his business — even though his entire crop is meant to be shipped overseas.
“I am not an alarmist,” said Bensend, president of the Midwest Shippers Association, a grain export group. “We need to let the president do what he sees as wise. I think we have the same objective and he has our best interests in mind.”
That means balancing the concerns of the two sectors so that neither steelworkers nor farmers get a raw deal, he said.
Navigating among competing domestic and global i nterests is complicated, though.
Two weeks after the administration imposed a tariff on solar panels, China opened an anti- dumping investigation into U. S. exports of sorghum, a grain used in livestock feed. The United States was virtually China’s sole foreign source of sorghum last year with $1 billion in sales. Almost half of the U. S crop is grown in Kansas.
The European Commission has presented its members with a $ 3.5- billion list of American products that could be targets of retaliatory measures and agricultural products were on the list.
House Speaker Paul Ryan issued a statement that said, “I disagree with this action and fear its unintended consequences,” and added, “We will continue to urge the administration to narrow this policy so that it is focused only on those countries and practices that violate trade law.”
Ryan, from Wisconsin, is no doubt trying to assure constituents like Mike Cerny, a soybean and corn farmer in Sharon who works about 2,500 acres, some of it his own, some his customers’.
Cerny, who voted f or Trump, said he liked most of Trump’s policies, particularly tax cuts. But if the tariffs “were to start some kind of a trade war, this would not be good for his support in farm country,” he added.
His perspective is shared by Davie Stephens, vicepresident of the American Soybean Association, who farms about 5,500 acres in Kentucky, the home state of Republican Senate leader Mitch McConnell.
“Of course I’m worried about the tariffs,” he said. He and other association members plan to meet with McConnell and other members of Congress when they visit the capital next week. “We’re making sure we do have that access to the global market,” Stephens said after he finished unloading a forklift on his farm in Wingo, in western Kentucky.
Over the years, Stephens, 67, said, he has voted for Republican and Democratic presidents. “I’ve supported everything they’ve tried to do for farmers,” he said, “but any tariff could hurt farmers if our consumers retaliate.”
Import restrictions on foreign steel have been pursued in some form by pretty much every administration going back to Richard Nixon’s in 1969.
The heavy duties on Chinese steel that President Barack Obama imposed in 2016, which helped limit imports to two per cent of the steel coming into the country, remain in effect.
In 2002, President George W. Bush imposed tariffs and quotas on steel, which cost the economy millions of dollars and job losses, according to a report the next year by the U. S. International Trade Commission.
Gould has been farming for more than 50 years, long enough to have seen commodity prices boom and farmland prices zip to highs no one expected — and also to have seen prices fall and to watch farmers in utter crisis in the mid-1980s. For him, talk of a trade war jars memories of a different, grim period, when President Jimmy Carter imposed a partial embargo on grain sales to the Soviet Union.
“I heard Carter talk about what he was going to do and I thought, ‘ Well, there’s $ 50,000 down the drain,’ ” Gould said. “As it turned out, it was way more than that.”
IT’S THE RETALIATION RISK. THE WORLD’S ALREADY AWASH IN GRAIN AND THEN IF YOU LOSE A KEY CUSTOMER, IT’S BIG. THEY’RE GOING TO GO SOMEWHERE ELSE TO BUY IT.
— ILLINOIS FARMER ELDON GOULD, WHO VOTED FOR DONALD TRUMP THE AG ECONOMY IS NOT VERY GOOD RIGHT NOW — FRAGILE IS THE POLITE WORD.