President Donald Trump is wearing people out. Ukraine, Gaza, Iran, India-Pakistan, dozens of trade supplicants, the reconciliation bill, rescission bills, the Pope’s funeral, a trip to several nations in the Middle East, kicking the pharmaceutical giants in the teeth, looking a gift plane in the mouth and what else?
For cattlemen, whether cow-calf or feedlot operator, this is their time with leverage. Trump understands leverage works worldwide. The industry’s biggest short-term problems are renewal of packing plant registrations to export beef to China and battling those stubborn Englishmen on growth promotants. But we’re not counting out the Trump team on either.
The China negotiations have been generally outlined, dropping tariffs on incoming China products to 30% (added to previous tariffs) and our exports to China at 10%. The two nations have agreed on a process for further formal trade talks while pausing the huge tariffs for 90 days. Some doubted China would come to the negotiating table for months but reality can bite even the Chinese Communist Party. We are far and away the biggest customer of a nation whose economy is built on exporting. Even imperious dictators have to maintain control of the situation.
So, the two biggest economies in the world are weighing realities against wants. We don’t trust China, based on their past trade behavior, and China knows Trump’s team is neither stupid nor weak.
Some have suggested that the U.S. is playing a good cop, bad cop routine, with Treasury Secretary Scott Bessent the good cop and Trump the bad cop, ratcheting tariff rates back up if serious progress is not made, economist John Carney reports. U.S. Trade Representative Jamieson Greer reinforced that. If China doesn’t live up to even the initial agreements, the tariffs would be raised again. With the old tariffs and the 30% reciprocals, the tariffs now are over 50%. But there is a lot yet to be negotiated.
It was enough to make one wonder when the Chinese admitted that they didn’t worry about living up to Trump’s Phase One deal because they knew they could buffalo the Biden administration. We are so fortunate that they bought lots of our product. And that no one has figured out how to reverse engineer the beef animal by analyzing a steak in the lab.
Ninety days is not a lot of time to negotiate with the inscrutable and canny Chinese. But even 60 days can build a lot of steam in the pressure cooker that is millions of out-of-work, hungry and angry Chinese people.
In Washington, the House released a more detailed version of the tax portion of the reconciliation bill—389 pages. Key provisions include a compromise increase from $10,000 to $30,000 for the state and local tax deduction, removal of taxes on tip and overtime income (expiring in 2028), some tax deductions for car loan interest and making the current personal income tax brackets permanent.
The ag committees are wrestling with the Supplemental Nutrition Assistance Program (SNAP) programs to save money. The states, not surprisingly, are resisting moves to shift costs to them. One proposal discussed basing states’ increasing share of costs on their percentage of erroneous payments.
The Medicaid program is the biggest problem. Congress expanded Medicaid by incentivizing the states to add millions of able-bodied adult Obamacare recipients, by having the federal government pay 90% of the cost. Medicaid, designed to be a safety net for the poor and disabled, is now sucking money away from them and providing a free ride for able-bodied, working age adults.
A Wall Street Journal story pointed out that nearly 50% of New York City residents and 40% of California state residents are on Medicaid.
Remember, cutting tax rates always increases receipts to the federal government. The left and the media keep portraying the spending cuts as necessary to “enable” the tax rate cuts for billionaires. Really, the bottom half of the population pays little or no tax, the top 1% pays over 40% and the 2017 tax cuts mostly benefitted lower and middle income earners.
Agriculture is one of the sectors concerned about deporting illegal workers when it is chronically short of labor. The Farm Workplace Modernization Act has been reintroduced in the House and needs a Senate sponsor. Rep. Derrick Van Orden (R-WI-03) is also working on an H-2A bill that would require illegals to deport and then re-enter on an expedited basis. His bill would extend the program to non-seasonal workers like dairy workers and be renewed every three years instead of annually. — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions of WLJ or its editorial staff.)
