By Tim Burrack - Arlington, Iowa
“Those who cannot remember the past are condemned to repeat it” warned the Spanish philosopher George Santayana more than a century ago.
Listening to our major presidential candidates talk about trade, I’m worried that we’re about to blunder our way into an old mistake.
Both Hillary Clinton and Donald Trump indulge in the bombast of protectionism. They carry on about opposing the Trans-Pacific Partnership, renegotiating NAFTA, and imposing massive tariffs on imports from China.
If the United States retreats from global markets and embraces the false comforts of economic isolationism, however, we’re all going to pay for it dearly—and for a long time.
Export opportunities will dry up, costing jobs. Consumer goods will become more expensive, hurting poor people the most. And farmers like me, who depend on sales to foreign customers, will take some of the worst hits.
These are good reasons to avoid a trade war. Yet the bad effects are even worse than that because they have a way of lasting forever. Today, for example, Americans are still paying for the protectionist lapses of a generation ago.
So let’s take Santayana’s advice and remember the past.
In the early 1970s, inflation, foreign demand, and federal policies caused the price of farm products to spike. Americans started to pay a lot more to put food on their tables.
For soybeans, the problem was severe. They’re an important source of protein. They feed both people and animals, meaning that the price of soybeans affects the price of meat, eggs, and milk.
By 1973, President Nixon thought he had to act. That June, in a bid to reduce prices, his administration announced an export embargo on grains, including soybeans. Suddenly, farmers couldn’t sell them abroad. This created a huge surplus in the United States.
The plan worked in one sense: The price of soybeans dropped by almost half.
But that drop in price devastated farmers, who suffered as the export restrictions cut off an essential source of income.
The embargo was temporary. Shortly after it went into effect, the government began to loosen its controls. By October, they were gone entirely.
So it might seem that its effects were short-lived—an emergency measure that hurt farmers for just a brief period.
Except that we’re still reeling today.
That’s because the Japanese relied on American farmers to supply their soybeans, which they used not only to fatten farm animals but also as an essential ingredient in tofu and soy sauce.
By trying to solve a perceived food crisis in the United States, the Nixon administration sparked one in Japan. A Japanese newspaper reporter described its significance: “A shortage of soybeans in Japan would be far worse for us than if you ran out of hamburger in the U.S.”
Japan wasn’t ready for the embargo. “It shocked Japanese society, and people felt anxious about their heavy dependence on the United States,” wrote Kazuhisa Oki in a 2008 paper for Harvard University’s Program on U.S.-Japan Relations. “After this experience, the Japanese government tried to diversify supply sources to lessen the impact of similar moves in the future.”
As a result, Japan made huge investments in Brazil’s soybean industry, which at the time was small. “This was a highly successful initiative, and Brazil became a major world exporter of soybeans,” wrote Oki.
It remains one today—and American farmers like me are now in direct global competition with Brazilian farmers because of a half-forgotten mistake in 1973.
Protectionism is the curse that keeps on taking. Its negative effects can linger long past the formal end of any trade war.
Today, Japan once again gets most of its soybeans from the United States, though American farmers don’t dominate the market as we once did. Brazil is now a major source of soybeans for Japan and many other countries as well.
When world leaders hear the rhetoric of Clinton and Trump, they’re no doubt questioning the reliability of the United States as a trading partner—and they’re thinking about forging new relationships with other countries that have the potential to deny opportunities to Americans well into the future.
So let’s remember the bad choices of the past—and refuse to make them again.
Tim Burrack raises corn, soybeans and pork on a Northeast Iowa family farm. He serves as Vice-Chairman and volunteers as a Board Member for the Global Farmer Network.