Iowa is a trade casualty

EDITORIAL

BY ART CULLEN

Everyone should be relieved that we have reached agreements on modifications to the North American Free Trade Agreement among the United States, Canada and Mexico. From an immediate reading Monday, the main changes involve percentages of cars that must originate in the United States, and changes were made to prevent Canada from dumping dried skim milk into the US market. President Trump called it a big win for farmers.

This after delivering a belly blow to soybean markets. That $3 per bushel haircut that Trump’s tariffs put on soybeans resulted in a 13¢ rally Monday morning with news of Canada coming aboard with Mexico on an amended NAFTA. Plus, Trump has offered disaster payments to soybean growers amounting to about 83¢ per bushel. So we’re still a couple bucks off tall cotton.

And we have no agreement with China. To the contrary, Trump just ordered up more tariffs on our biggest export customer for pork and soy, and the Chinese responded in-kind. No resolution is in sight, not at least before the November elections. And even if it were, the damage is done. Markets are knocked down. And maybe that’s what everyone wanted in the first place.

The new NAFTA will do nothing more for John Deere tractors. It will do nothing for Tyson Fresh Meats, other than stopping the fight with our two neighbors. It brought back 13¢ to the soybean market.

This is a huge cost borne by Iowa farmers and food processors so the President could throw a temper tantrum and deliver on a campaign promise. He threatened to blow up NAFTA. What he blew up was skim milk dumping and the soybean market. Those markets will take years to recover, because that’s how long this trade war with China could last. And even in the absence of tariffs, the United States’ position as a reliable trade partner and advocate for free markets is in tatters.

IT COULD TAKE years for Iowa agriculture to recover from the President’s bluster and blunder. Most Iowans who are paying attention already understand, and that’s why a lot of shiny new equipment is sitting on the lot without lookers. It does set a tone for the midterm elections. In Northwest Iowa, it should be as powerful an issue as health care or Medicaid because the issue crosses party ideology. Combined with those two issues, it plays well for Democrats heading into November. It helps set a tone that finds Fred Hubbel up slightly over incumbent Republican Gov. Kim Reynolds, which is remarkable. And it gives the likes of JD Scholten a chance against Steve King, however remote it might be.

Most Iowa Democrats, with the exception of agriculture secretary candidate Tim Gannon, have failed to seize on it fully. While the governor does not negotiate trade deals with China (not even Terry Branstad can) it does remind some voters how Republican administrations are not automatically friends of agriculture. It shows how they might not quite understand business, and that the old Republican Party that stood up for free trade died with the election of Donald Trump. One would think a business guy like Fred Hubbell would find some natural turf here, but he is sticking to Medicaid budgets and health care issues as the polls say he should. But free trade remains an animating issue in Iowa, as it should, and the Republican Party might be on the wrong side of Iowa history this time around. If we were Hubbell needing to make hay in rural areas, we would be talking about how a Republican administration is single-handedly tearing down markets built with the help of Bob Ray, Terry Branstad and Tom Vilsack. Protectionist and isolationsist Steve King is Reynolds’ campaign chairman. She is fully on board with Team Trump Tariffs. They are Making Iowa Poor Again (MIPA) while the traders take their share on the way up or the way down.

Someday Iowa farmers might decide they are tired of $3 corn and a spent hen in the pot. But Democrats must offer an alternative.