Trade, not aid

EDITORIAL

BY ART CULLEN

President Trump said tariffs are GREAT while announcing $12 billion in assistance to help with the disastrous after-effects of the launch of his trade war with China, Mexico, Canada and Europe. Our soy business with China alone is worth more than $14 billion per year. The $12 billion program is supposed to ease the bite from tariffs on pork with Iowa’s three most important customers. It is not designed to cover for the reduced hours or outright layoffs in the Midwest due to tariffs on steel designed to protect the friends of Commerce Secretary Wilbur Ross.

There is no question that direct payments to soybean growers will help reduce the financial panic that is starting to set in, with beans down 20% over the summer since the tariffs kicked in. But it will not make up for current and future price deterioration as China and Brazil plant more acreage to soy to make up for lost US supply. This will flood the world with soybeans and drop prices further.

We do not believe that $12 billion can cover soybean farmers, the hit to Tyson Fresh Meats (which exports a lot of pork from Storm Lake) or the ripple effect on Main Street banks and retailers.

Neither do most Republican senators. They want trade, not aid. Senators Chuck Grassley and Joni Ernst, both Iowa Republicans, politely urged President Trump to end this war and open trade. Here is what Grassley said: “I do not fault the President for trying to get a better deal for Americans, but it’s not fair to expect farmers to bear the brunt of retaliation for the entire country in the meantime.” He said he would continue to work with the Administration for a permanent solution. Their work so far has come to naught.

Sen. Ron Johnson, R-Wis., called it welfare and said farmers don’t want it. They want to make their living honestly through the markets. But they will take it. Other Republicans not from soybean or pork states weren’t too crazy about the idea of further distorting world trade with direct commodity support and trade promotion that ends up dumping pork on the world market at depressed prices.

Grassley said he warned Trump in strong terms not to get into this, but Trump doesn’t listen. He was convinced to dole out some lard by Agriculture Secretary Sonny Perdue, who showed him a map of where he won — in the Midwest which he is killing with tariffs on ag products and steel. Trump started this war with no idea how to win it, which is always the case in war that springs from base impulses.

The agriculture department could spend up to $30 billion through the Commodity Credit Corporation to mitigate the trade war for agriculture. That might take care of a few months of the regional economic trauma currently being inflicted. It is a pittance compared to the overall cost to Iowa over the next two years, which is how long this war will last since Trump’s term lasts that long.

Iowa farmers already have lost money six years running. They must be used to it, because their message as reflected from our senators is not nearly emphatic enough. Or maybe they have just given up, recognizing that they are pawns in power games played by senators and a certain egomaniac who is selling this great nation and its farmers down the river.

You do not go into a negotiation threatening to burn down the house. You open by asking how we can make trade more efficient so that all boats rise together. You do not start with a threat of tariffs. This is how economic depressions are created. We run a surplus in ag trade with Canada, Mexico and China. It will now become part of the trade deficit, if it matters. Deficits of any sort don’t seem to matter to the Republican Party anymore, and we have to wonder what they really think about free trade. It used to be Tom Harkin talking about “fair trade.” Now Grassley trusts, apparently, that he can work through this to a prompt and happy conclusion for farmers and pork purveyors. If that is so, he would know the details of the offer. He doesn’t really. And nobody really knows how much damage is done or will be done, and whether $12 billion is more than just a drop in the bucket when cast against a single year of soy sales. It will be interesting to see how much of that money actually ends up in a farmer’s pocket in Buena Vista County.

Trump created the problem and offered a bauble to farmers to see if it might distract them past November. Grassley is afraid to say that Trump did this to us, and the Republicans running Congress never had the guts to actually call him out. When the war is over and the casualties are counted, remember that.