Delaying a Trade War “Bullet”
May 24, 2018
By Tim Burrack: Arlington, Iowa
Talk ain’t cheap.
Just this week, the trade talks between the United States and China have taken a turn in a positive direction, boosting the value of my crops in Iowa.
This is a concrete reality, not just a theory.
On Saturday evening, we finished planting 2,500 acres of corn and soybeans. On Sunday morning, Secretary of the Treasury Steven Mnuchin went on television and said that the Trump administration is “putting the trade war on hold.”
As a result, my crops have gained at least $30,000 to $45,000 in value, compared with a week ago. That’s because commodity markets have reacted favorably to this progress on trade.
There’s nothing cheap about any of this—and nothing random, either. It ties directly to what could be a successful round of trade negotiations.
I want to thank our trade diplomats for this development. They have us headed in the right direction. Maybe something really good is about to happen.
All spring, I’ve been downright pessimistic. Starting in March, when President Trump announced steel and aluminum tariffs, we’ve been fighting with China. As a war of words escalated, so did the threats of trade retaliation.
China announced a series of tariffs that targeted American exporters across a range of industries. Farmers were among the hardest hit. The proposed tariffs of 25 percent on soybeans and pork products were brutal. They would have virtually wiped out an entire market for us—and I started to feel it personally.
The value of my farm actually declined. I’m not just saying this: I saw it happen right before my eyes, as commodity markets responded to the realization that American farmers were on the verge of losing a vital customer.
So the principle of “talk ain’t cheap” cuts both ways: Some kinds of trade talks can help while other kinds can hurt. For the last two months, it’s been all pain and no gain.
The irony is that I live in “Trump Country”. My neighbors and I supported President Trump’s election. We understood that he would bring a new toughness to trade talks. What we hoped to avoid, however, was the disaster that had seemed to descend upon us.
All of a sudden, things are looking up.
On Monday night, President Trump tweeted the good news: “China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products – would be one of the best things to happen to our farmers in many years!”
Less than two hours later, he followed up with a new tweet: “Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce.”
What a welcome announcement.
But let’s keep things in perspective. As the second tweet says, this is a “potential deal.” I hope our trade diplomats pull it off, and pull us back from the brink of a trade war that will hurt farmers and consumers and just about everybody—a trade war that nobody can win. No one ever does.
If they fail, the results will be devastating. We’ll be right back to where we started a few weeks ago. Things might even go from bad to worse.
The negotiations are complicated and involve a lot of moving parts. Everything could change tomorrow.
As of right now, China apparently has promised to buy more farm products as well as more energy and services from Americans. It also proposed reducing its 25-percent tariff on American automobiles to just 15 percent.
The bargaining involves a give and take, of course. An American concession could involve a potential reprieve for ZTE, China’s second-largest maker to telecommunications equipment, even though it has been accused of violating U.S. sanctions on Iran and North Korea. Does this make sense for our national security? I’ll leave that for others to decide.
I won’t say we’ve dodged a bullet because so much remains to be done. At the very least, we’ve delayed a bullet.
The goal of these trade talks, of course, should be to ensure that the bullet never gets shot—because I know who it will hit.
Tim Burrack raises corn, soybeans and pork on a family farm in Northeast Iowa. He serves as Vice-Chairman and volunteers as a Board Member for the Global Farmer Network (www.globalfarmernetwork.org) where this column first appears.
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A version of this column first appeared at The Hill on May 23.