Tariff war

Farmers in Ray County and across the Midwest are rightly worried by the Trump administration’s ill-timed, shoot-from-the-hip foreign trade policy. 

With arrogant disregard for the drought that hurt our farmers last year and the flooding that hurt our farmers this year, the administration doubled down on tariffs, increasing them from the original 10 percent to the present 25 percent.

The policy, aimed at the world’s second-largest economy, China, hurts American farmers, among others. Whether the hurt will be made up in the long term, or will become a long-term hurt, is a matter of speculation – a risk President Trump is willing to take with farmers’ money.

Trump’s election in 2016 drew heavily on support from rural voters. His solution for how to accomplish the goal of capturing their votes again in 2020, while forcing farmers to endure damaging tariffs, amounts to buying off farmers while appealing to their patriotism.

Regarding the plan to pay for loyalty, Trump is poised to engage in something he decries – a socialistic policy. He plans to increase “offsetting” payouts to farmers who lose money from $12 billion last year to $15 billion this year.

Where will Trump get the money? He said dollars generated by tariffs on China will cover the cost.

The logic gap in that idea is that U.S. importers pay those higher tariffs on Chinese goods. Importers then pass on the higher cost to consumers. This means prices paid at cash registers, including at stores in Richmond, will increase while Americans’ disposable income will decrease.

In reality, to pay off our farmers last year, the administration borrowed from the Treasury Department and there is talk the administration may do the same this year. 

Conservatives should view the idea of borrowing the money in this economy as scandalous. The United States is $22.3 trillion in debt. The debt grows by about $20,000 per second. There is no plan for how to break even. Absolutely scandalous.

The Balance reported that China holds a U.S. IOU for $1.2 trillion. A sneaking concern is that the U.S. debt to China could increase as the U.S. borrows more money, either directly or indirectly, to “punish” China.

Regarding the appeal to farmers’ patriotism, some Republican leaders and agricultural leaders are not convinced the Trump administration’s intention to continue trying to navigate tariffs along an uncharted trajectory makes economic sense for American agriculture. There is not only the concern about what happens today, but whether China’s decision to find alternative supply sources will hurt American agriculture and other business sectors for decades to come.

The troubling, unanswered question is this: How much will be lost and at what point, if ever, will losses be made up?

The future of some GOP leaders is on the line. Some farmers could face bankruptcy. Trump has been made aware of the concerns, but Senate Finance Committee Chairman Charles E. Grassley, R-Iowa, told The Washington Post, “I’m not sure, if you talk to him face to face, he hears everything you say.” 

The Post went on to quote Senate Majority Leader Mitch McConnell, R-Kentucky, regarding the impression that Trump may not have a clear endgame for tariffs. 

“Ultimately, nobody wins a trade war unless there is an agreement at the end, after which tariffs go away,” McConnell said.

National association leaders for soybean, corn and wheat growers have expressed grave misgivings about ongoing tariffs. American Soybean Association President Davie Stephens said the trade war has “real-life consequences” for farmers who already have plenty of other issues to address after a year of drought followed by this year’s floods. The impact of both has been felt here in Ray County.

“Adding to current problems, it took us more than 40 years to develop the China soy market,” Stephens said. “For most of us in farming, that is two thirds of our lives. If we don’t get this trade deal sorted out and the tariffs rescinded soon, those of us who worked to build this market likely won’t see it recover in our lifetime.”

Missouri Gov. Mike Parson on April 24 asked Trump, a fellow Republican, for a disaster declaration due to this state’s floods. Some of that money might aid farmers. The administration has yet to respond.

Challenging China’s practices of currency manipulation, theft of trade secrets, theft of copyrights, internet hacking of intelligence, business and other sectors of operations in this country is necessary. Trump has that right.

What Trump has wrong with this tariff war is that he shot first, then took aim. He did not, over a period of weeks, lay out the case to the American people for the trade war. He did not define clearly the potential consequences for consumers and the expected benefits. He did not create a coalition of trade partners to support the plan – in fact, his wide-ranging trade wars and bellicose talk directed at Canada, Mexico and the EU alienated potential allies. Trump did not, in short, follow the template laid out by an astute national and international leader, an honorable man who served this country in a time of war, a seasoned member of the political establishment who hones his abilities through years of public service, President George H.W. Bush.

Bush prepared this nation and the world for the Gulf War, executed that war with praiseworthy effectiveness and then withdrew with a clear victory that increased U.S. prestige worldwide. That is the difference between a reality show-style, phony-baloney ability to play to TV cameras versus a life forged in the crucible of real political experience.

Regardless of how the trade war ends, when compared to Bush, Trump has revealed himself as a political rookie whose trade war is becoming increasingly painful for farmers, fellow Republicans and American consumers.

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