“Here once the embattled farmers stood, And fired the shot heard round the world.” The phrase comes from the opening stanza of Ralph Waldo Emerson’s “Concord Hymn” (1837) and refers to the first shot of the American Revolution. Last week President Trump fired a trade shot that was also heard around the world. While his decision to actually implement tariffs on steel and aluminum is not a wise or prudent economic policy, it has the desired effect of getting the attention of some of our more recalcitrant trading partners and putting them on notice that the U.S. is serious about trade reform.
Throughout my farm broadcasting career, U.S. farmers, farm leaders, and lawmakers have been demanding free and fair trade. Terms like “level playing field” and “competitive advantage” have been tossed around. Yet over the past 40 years, despite a variety of intense negotiations by administrators of both parties, very little progress has been made.
While NAFTA and CAFTA have made some progress with trading partners in Canada, Mexico, and Central America, almost no progress has been achieved on breaking down trade barriers with the EU, Japan, and China. Despite NAFTA, Canada and Mexico still engage in tariffs and duties that give them an unfair advantage over U.S. farmers. Japan pours cars by the millions into the U.S., but keeps out most U.S. beef and other food products. The EU bans U.S. GMO products; Russia regularly bans poultry imports; and the trade door with China has more products coming here than are allowed to go there.
So in steps Donald Trump with a get tough, no nonsense approach to trade agreements. He pulls out of the Trans Pacific Partnership, starts over on NAFTA, and now implements tariffs on steel and aluminum. All of these are designed to send the message to our trading partners that the U.S. is serious about trade reform and to force them to make concessions that they have been unwilling to make in the past. This is a dangerous game the President is playing, and the stakes are high. Yet, they are high for China, Canada, and Mexico as well. They have just as much to lose from a trade war as we do, a fact not lost on Chinese leaders. “A trade war has never been the right way to solve the problem, especially under globalization,” said China’s foreign minister, Wang Yi. Such a conflict “will only harm everyone.” With a $100 billion dollar trade surplus with the U.S., China will need to find a way to reach some kind of agreement with the U.S.
In a move that demonstrated how committed the President is to reaching a NAFTA deal, he temporarily exempted Canada and Mexico from the tariffs as motivation to comprise on key NAFTA issues, including agriculture. Meanwhile Brussels continues its policy of smug arrogance. They criticize the tariffs while maintaining their duties and bans on a host of U.S. products and opposing our efforts to bring biotechnology to Africa.
It was not coincidence that the President chose the same day as the Trans Pacific Partnership agreement was signed by 11 other nations to announce this tariff decision. This diverted attention from the fact that the U.S. missed out on reducing tariffs into some of the fastest growing markets in Asia by over 40%. It is also disingenuous — for many of those activists and those Republican and Democrat lawmakers who are shouting about the tariffs, did not support TPP when the U.S. was still in.
For American farmers to continue to find new markets for their ever increasing production, trade barriers around the world need to come down. A way must be found, with diplomacy or economics, to limit the access to our market until other nations allow us greater access to theirs. While I do not support Mr. Trump’s tariff plan, I do support his get tough on trade attitude. Obviously our mollycoddling of the past 40 years has not worked. Agriculture has always wanted and needed a get tough policy on trade. Now that we have it, we have to figure out how to use it and how to live with it.
By Gary Truitt