Agriculture Interests Still Nervous About Tariffs, NAFTA 2.0
A corporate farmer, a farmers' lobbyist and a farm economics researcher discussed the politics and pocketbook effects of tariffs in the sector, and how much sway farmers will have in the outcome of trade policy. The trio -- along with former Agriculture Secretary Tom Vilsack -- spoke on a panel at the Council on Foreign Relations Dec. 13. "Farmers want to stay with President Trump. A lot of them supported Trump," said Brian Kuehl, executive director of Farmers for Free Trade. "But I think the trade war is biting. Even for farmers we talk with ... who support the president, that patience is starting to wear thin."
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Different sorts of farms have been affected differently by retaliatory tariffs from China, Mexico, Canada or other trading partners. For instance, even though Mexico levied 25 percent tariffs on cheese coming from the U.S., 2018 was the year with the highest-ever dairy exports, according to Vilsack, who now is CEO of the U.S. Dairy Export Council. But soybean exports to China are down 94 percent, Kuehl said, and Washington cherry exports are down 50 percent. "China purchased some soybeans just this week, but it's a drop in the bucket," he said.
Jim Mintert, an agriculture economist at Purdue University, said farmers are worried 2019 will be worse than 2018, because some of their price contracts were inked before the trade war began in May. "There are layers upon layers of tariffs at this point," he said. "Had the U.S. just taken on China, that would've been a big fight. But we didn't just take on China, we took on Mexico, we took on Canada, we took on Europe, we took on India."
Vilsack asked the panelists if they thought the NAFTA rewrite would pass in 2019. Mintert said probably, and so did Shonda Warner, managing partner of a partnership that farms or rents out agricultural land on 60,000 acres around the country. Kuehl said yes. When Vilsack asked the others why they weren't as confident as was Kuehl, he interjected that he's really not that confident.
"It's clear to me the USMCA will not pass Congress with the steel and aluminum tariffs in place," Kuehl said. He said that Trump's idea to start the withdrawal process from NAFTA "ostensibly as a way of increasing leverage on Congress" is a really bad idea. "We think it's not worth the risk. We also don't think it gets you votes," he said. Warner agreed. "I think a velvet glove sometimes is a helpful thing," she said.
Dan Glickman, who was in the House of Representatives before becoming agriculture secretary in the Clinton administration, questioned even the "probably" response, saying he thinks there are more protectionists in the Republican party now, and Democrats don't have the incentive to pass it. Vilsack said proponents of the new NAFTA will have to have a clear message about why the replacement is better.
"Farmers for Free Trade, we're going to put a lot of resources into getting USMCA passed. we think the votes are going to be there, ultimately NAFTA benefits America," Kuehl said. "It's going to be a close vote, it's not going to be overwhelming, but we think we can pull it off."