Trade is back in the spotlight, after President Donald Trump announced he will impose steel and aluminum tariffs. All the talking heads are spinning things every which way. You’ve got to hand it to the man—he did what he said he would do. You may or may not like it but when was the last time you saw that in a president or any politician for that matter?
We really should wait for the details before we go wild with speculation. We still have some great things happening on trade. Gregg Doud was finally cleared to be our chief U.S. agriculture trade negotiator for the Office of the U.S. Trade Representative. Gregg is a good man, and I know him personally. He’s sharp and honest and, heck, he grew up on a wheat and cattle operation in Kansas. He worked for NCBA on trade issues and worked for Sen. Pat Roberts (R-KS) on the same issues. He’s got experience, drive and can get things done.
We in agriculture absolutely need export trade, but we also need it to be fair to all those trading and to the U.S. Yes, we perhaps needed to take a second or third look at NAFTA. After 20-plus years things have changed—the economics, social and political climate has changed.
Every country has their pet industries that they will protect to no end. Canada has dairy, we have sugar, Mexico has labor, Japan has rice. It always seems to me these trade issues come down to labor. If we follow the history of prosperity around the world over the centuries, the trail of wealth always follows the path of inexpensive labor.
It seems that the world has developed to the point that cheap labor is getting hard to find. It’s human nature to want to do better and improve our lives. History also shows that labor can get out of balance and gain too much power. Business now realizes they must share their wealth creation with labor, which brought them to the party.
We are currently being told that the proposed steel and aluminum tariffs are bad for everyone except domestic steel producers. Just how much will it add to the price of a can of soup? I’ve heard a penny or two, which doesn’t sound absurd.
Economists and politicians are telling us that these tariffs will cause a trade war and that agricultural products are usually the first category in the crosshairs of trade retaliation. No one wants to see global trade disrupted. The global economy is popping on all cylinders and every region of the world is enjoying prosperity and growth. However, I’m sure there are places that are not.
Trade is also a weapon. It can keep peace and many countries go to war over trade and particularly trade in food. I hate to think about it, but we certainly don’t need governments to become so disagreeable over trade that we get into a huge, global food fight.
The Trump administration scrapped the Trans-Pacific Partnership trade agreement a little too hastily in my opinion. Working with 12 other countries in the Pacific Rim would be great for everyone and it’s a region where we need some calm, collected minds. Besides it would also reduce the huge tariffs we have on U.S. beef in Japan and other countries. A multi-lateral agreement is efficient, and a bilateral trade agreement will take much longer to produce. The thing is these trade agreements become complex when governments start throwing in environmental or social implications. They need to be kept simple and straightforward and focus on commerce. When you’re doing mutually beneficial business with someone, you’re less likely to disagree and argue about small details.
But we can’t forget the 800-pound gorilla in the room, which is China. Everyone involved with the World Trade Organization thought it was great to welcome China into the global trading arena, through the WTO, back in the early 2000s. Many folks thought that their prosperity would bend China toward a more democratic governance. Over the past 15 years we saw a Chinese middle class emerge, which is larger than our entire population. Every company in the world wanted to sell and produce products in China. It was a whole new market.
Now folks are getting concerned that China is going to exercise more economic power over the world. You must remember: They love capitalism. But they are still a Communist country. And now that their President Xi Jinping has secured himself as an autocratic president of China for life, they have few checks and balances on power run amok. This trade situation could get wild. — PETE CROW
