Trump offers farmers two pigs in a poke in exchange for China tariffs
President Donald Trump has offered Midwest farmers two pigs in a poke as appeasement for anti-trade actions that will steal the bacon out of their mouths.
Trump, in a meeting last week with Midwest governors and lawmakers, pledged to look into rejoining a trade agreement with Pacific Rim counties. He also dangled the idea of eliminating some restrictions on ethanol sales.
These are both significantly fatter pigs than he could have suggested. There has been speculation that Trump might suggest price supports or even having the federal government buy and donate food supplies to schools, food banks and countries struggling with hunger.
Farmers know that sort of scheme isn’t sustainable. They don’t want handouts, they want open markets.
Not a farmer? You have an interest in this, too. Agriculture is central to the economy of many Midwest states and a significant contributor of tax dollars to state and local governments. When prices fall and farmers go out of business, it affects all sorts of non-farm jobs. It also affects the state’s ability to pay for priorities such as education, health care and the environment.
Trump’s decision last year to pull the United States out of the Trans-Pacific Partnership. Iowa farmers and producers missed out on nearly $360 million in net export value, according to Iowa Farm Bureau estimates.
Trump tasked U.S. trade representative Robert Lighthizer and economic adviser Larry Kudlow with exploring the possibility of rejoining the TPP.
That’s good news for Bill Shipley, a farmer from Nodaway and president of the Iowa Soybean Association. “TPP would affect over 18,000 different tariffs in those countries,” Shipley said. “It would have a huge impact.”
But, Shipley said, rejoining the TPP won’t make up for a 25 percent tariff on Iowa soybeans going to China, which is the largest importer of whole soybeans from Iowa.
“No, it won’t make up for the loss to China. There isn’t any one country that can make up for the loss to China,” he said.
China bought an estimated $14 billion in soybeans from U.S. farmers last year and Iowa is the nation’s largest producer.
Pork producers alone would see an estimated $400 million loss from declining prices related to China’s tariffs, Iowa State agricultural economist Dermot Hayes told the Register. The TPP would certainly make up for part of that, but not all of it.
And that’s even if the United States were able to rejoin TPP on the same or better terms than were negotiated under the Obama administration. That seems unlikely now, if Trump is being chased back to the bargaining table by China.
Trump, during last week’s meeting that included Iowa Gov. Kim Reynolds, also suggested he might direct the Environmental Protection Agency to lift its summertime ban on the sale of fuels containing 15 percent ethanol. The restriction stems from the claim that burning E15 during warm weather leads to smog.
Allowing the higher blends would help corn producers, who have been struggling with low prices. It’s not the first time Trump has heard the idea. Trump spoke positively in early March about allowing year-round sales of E15, but did nothing about it.
The concern is that Trump might throw ethanol this bone in exchange for once again meddling with the Renewable Fuel Standard. The RFS sets the minimum volume of fossil fuels that must be blended into transportation fuel sold in the United States. The fossil fuel industry and its allies, such as Texas Sen. Ted Cruz, are continually trying to undermine the RFS.
“E15 is not some spoonful of sugar to help the RFS waiver poison go down," Iowa Renewable Fuels Association executive director Monte Shaw told the Associated Press.
Trump said things Midwest farmers, livestock producers and manufacturers wanted to hear last week. But will he follow through? After all, moving to rejoin the TPP would be an admission that he was wrong to pull out of the 12-country, Obama-administration deal in the first place.
In fact, the move would expose the fallacy of his America First, go-it-alone policy. It’s an admission that the U.S. needs its allies and friendly trading partners – including Canada and Mexico – to help us stand up to China.
Returning to the TPP and having year-round permission to sell higher-volume ethanol fuels are good ideas but they cannot and should not be consolation prizes for losing the largest market on the planet. Even if they could, Midwest policymakers and farmers can’t trust this administration’s word.
Instead of two fat pigs in a poke, Trump may well be offering farmers an empty sack.