Each morning when I get in my tractor, I turn on the radio and hope to hear a breaking-news report on how the United States and China have struck a deal and ended a trade war that’s causing pain on both sides of the Pacific Ocean.
Sometimes the latest developments are promising. Other times, they raise new worries. The only constant is more uncertainty.
First the good news: Last Friday, President Trump agreed to lift the 232 tariffs for steel and aluminum on Canada and Mexico, paving the way for ratification of the USMCA, the successor to NAFTA.
However, President Trump also raised tariffs to 25% on $200 billion in Chinese products. The Chinese immediately struck back with tariffs of up to 25% on $60 billion in U.S. products.
So the trade war continues.
Farmers like me are already reeling from tanking commodity prices. Soybean prices are so low that our costs will exceed our revenues. We’ll lose money on one of our major crops.
President Trump has proposed to soften the blow with a new round of federal aid for farmers. The administration has released plans for a trade mitigation program that will spend more than $15 billion to purchase goods that in normal circumstances we might have sold to China.
President Trump has supported policies that have helped farmers and businesses across the nation, from tax relief to regulatory reform. Yet this latest proposal, even as it’s offered with the best of intentions and will definitely mitigate some of the current damage, won’t do much to advance our long-term interests.
We don’t want more aid. We want more trade. We want stable markets for our crops. I personally believe our president, as a businessman, understands this. He believes it needs to be fair and free. I am hopeful this will be his end goal.
No matter which industry we are talking about, business leaders seek markets to sustain their business. This is true for farmers as well as for widget makers. We aim to provide good products, to sell them at fair prices, and to build stable and lasting relationships with customers.
Sometimes we face difficulties and must adapt, of course. In farming, our biggest variable is the weather. This year, for example, a cool spring has delayed our planting. We’re lagging behind where we’d like to be.
This is an ordinary problem. It’s also out of our control: We can’t change what Mother Nature gives us.
The trade war with China, however, is an entirely manmade problem. Perhaps it’s worth fighting. A lot of blame can be laid at China’s feet. The Chinese are famous for their theft of intellectual property and many experts accuse them of currency manipulation. They’ve also raised unfounded concerns about some agricultural technologies, like biotechnology, to drive down prices. And apparently, we were close to a deal when China reneged on previously made commitments.
At some point, however, we must come to terms — or all of us will pay dearly. As farmers, we’re already sitting on nearly a billion bushels of soybeans, because prices are so low. If the weather remains cool and wet and forces additional planting delays, some farmers may decide not to plant at all. Letting fields lie idle and accepting crop-insurance compensation may make better business sense than pouring labor and resources into a crop that we can’t sell at even a small profit.
Congress can do its part as well. It can pass USMCA — the renegotiated trade deal with Canada and Mexico, our two most important trading partners. With the 232-tariff obstacle removed, that should be an automatic, bipartisan decision. Unfortunately, although every economic analysis calls it at least a modest improvement over NAFTA, Democrats appear reluctant to approve the accord because it would give a political victory to a Republican president.
As a farmer, I can deal with the weather. I can also deal with the business cycle. What I can’t abide, however, is politics getting in the way of my ability to grow great crops and sell them to willing customers.
No amount of federal aid will change this basic equation.
The toughest negotiations are often the most worthwhile, of course. I’ve seen this in my life as a farmer, when I’ve tried to rent or purchase land. I’ve also seen it as a North Dakota state senator. We just wrapped up this year’s session and, as usual, we didn’t solve the hardest problems until the very end.
So maybe these trade talks with China will have a happy ending, and maybe Congress will do its job and approve USMCA.
In the meantime, out here in farm country, we just want to grow the food that a hungry world needs.