Weekend thread: Terrible U.S. diplomacy edition

“The U.S. soybean industry’s worst fears are coming to pass today,” the Iowa Soybean Association said in a statement as the first round of tariffs between the U.S. and China went into effect on July 6.

Soybean farmers will be among the biggest losers from the trade war, but the policy could cost other Iowa farmers and equipment manufacturers huge sums too. Rebecca Tan put together a useful timeline for the Washington Post on escalating trade hostility between the two countries.

Once upon a time–less than two years ago to be precise–Iowa Republicans raged about the Environmental Protection Agency’s Waters of the U.S. rule, as if it would devastate farmers and industries that depend on them. In a November 2016 letter, Senators Joni Ernst and Chuck Grassley and Representatives Rod Blum (IA-01), David Young (IA-03), and Steve King (IA-04) asserted that the “misguided WOTUS rule is an economic assault on small businesses, manufacturing and agriculture, and threatens the very livelihood of our fellow Iowans.”

The new trade war will cause far more economic damage here. Yet I haven’t seen any official comments from the Iowans in Congress about this issue since Friday. Last month, they asked Trump to “quickly resolve our trade differences,” warning that “these tariffs are taxes Iowa families cannot afford.”

I enclose below statements about the trade war from the Iowa Soybean Association, Democratic secretary of agriculture candidate Tim Gannon, and Congressional candidates Abby Finkenauer and J.D. Scholten. Susie Olesen reported here on how Ernst answered related questions at a July 6 town hall meeting. On the CBS program “Face the Nation” on July 8, Ernst had this to say about trade policy:

Our voters are supportive of President Trump. Our farmers just really think that he is doing the right thing. But unfortunately, we are caught in the crosshairs. America’s farmers and ranchers are always the first to be retaliated against in these types of trade negotiations, and the tariffs that have been imposed and the retaliation stemming from that puts us in a very vulnerable position as our markets go down. So I would just encourage the president, of course we want great deals, and I know he’ll be able to negotiate those, but we would like to see a number of these trade agreements wrapped up in short order. The sooner the better.

MARGARET BRENNAN: Well- do you hear of any progress? I mean, it sounds like the president is only talking about escalation and- and are you asking the president to send any kind of financial aid to some of these farmers?

SEN. ERNST: Well- no. And matter of fact, we push back on financial aid. Here in the Midwest we believe in trade not aid. We don’t want another welfare-type program going to our farmers. They want to produce and they want to sell their goods to- to markets. So that’s what we strive for. But I did speak with Ambassador Lighthizer, our U.S. trade rep, yesterday, and I did get encouraging news from him. I think there are a number of agreements that we’re very close on. And he is working on a number of- of new free trade agreements. So I- I am encouraged – I would ask that we stay strong. But at some point we have to close the deal. And I- as I said, I would like to see the president do that sooner rather than later.

MARGARET BRENNAN: Just to clarify, you’re talking about markets other than China? Perhaps deals with Mexico, Canada?

SEN. ERNST: Absolutely, markets other than China. I believe that we can work to a point where we have Mexico and Canada on board, I think China will be a much longer haul. But there are other agreements that are being worked on as well, and- and I would- encourage the ambassador as well as the president to get those done soon so that we can start developing those opportunities for our Iowa farmers.

Meanwhile, U.S. Secretary of State Mike Pompeo was humiliated during a recent visit to Pyongyang, Nick Wadhams reported for Bloomberg. He couldn’t get a meeting with North Korean leader Kim Jong-Un, couldn’t find out his schedule ahead of time, and wasted time at long banquets. Nevertheless, Pompeo put on a good face, telling reporters his talks had been productive. North Korea officials quickly “crushed that assessment,” denouncing the U.S. “unilateral and gangster-like demand for denuclearization.”

The latest developments support Ben Cobley’s assessment: Trump’s summit with Kim Jong-Un was “a dog and pony show with zero tangible solutions or apparent endgame.” North Korea made no real concessions, and there’s no reason to expect progress toward denuclearization.

Finally, Andrew Jacobs reported for the New York Times today on disturbing efforts by the U.S. delegation to water down, then scuttle a pro-breastfeeding resolution under consideration at the World Health Assembly in Geneva.

Based on decades of research, the resolution says that mother’s milk is healthiest for children and countries should strive to limit the inaccurate or misleading marketing of breast milk substitutes. […]

The Americans were blunt: If Ecuador refused to drop the resolution, Washington would unleash punishing trade measures and withdraw crucial military aid. The Ecuadorean government quickly acquiesced. […]

Health advocates scrambled to find another sponsor for the resolution, but at least a dozen countries, most of them poor nations in Africa and Latin America, backed off, citing fears of retaliation, according to officials from Uruguay, Mexico and the United States. […]

In the end, the Americans’ efforts were mostly unsuccessful. It was the Russians who ultimately stepped in to introduce the measure — and the Americans did not threaten them. […]

The intensity of the administration’s opposition to the breast-feeding resolution stunned public health officials and foreign diplomats, who described it as a marked contrast to the Obama administration, which largely supported W.H.O.’s longstanding policy of encouraging breast-feeding.

Who in the Trump administration gave the order to play hardball on this issue? No one but formula companies could benefit from the new U.S. position.

This post is an open thread: all topics welcome.

Iowa Soybean Association statement, July 6:

Statement is courtesy of 22 farmers who serve as directors of the Iowa Soybean Association.

“The U.S. soybean industry’s worst fears are coming to pass today with the implementation of tariffs on Chinese imports. This aggressive action positions Iowa and America’s soybean farmers directly in the crosshairs of a full-scale, multi-national trade war if China, as it has promised, imposes tariffs on U.S. soybean imports.

“Short- and long-term consequences are significant. U.S. soybean prices are already far below the cost of production will continue to erode, placing additional pressure on farm families who have already experienced a nearly $2-per-bushel decline since March.

“Long-term, a full-blown trade war risks entrenching anti-American sentiment in a country that consumes nearly 60 percent of global soybean trade and about one of every three rows of U.S. soybean production. It will incentivize additional trading partners, including Canada, Mexico and the European Union, to do business absent the United States. It’s clear that our competitors are working diligently to grow their capabilities and overcome any shortcomings, both logistically and economically. This is of great concern to the nearly 42,000 Iowa soybean farmers who derive their livelihood from an industry built on the ability to do business internationally.

“There are winners and losers in every trade war. The soybean industry is a loser if we become a residual, rather than primary, supplier of soybeans to China. Iowa is disproportionately impacted because of the tremendous volume of soybeans produced here and the need to move our product to international customers.

“Iowa farmers are resilient, resourceful and accustomed to dealing with situations out of their control. We recognize and fully appreciate the legitimate issues involving U.S. and Chinese trade relations. As we prepare to harvest another substantial soybean crop this fall, we urge U.S. and China officials to engage in full and transparent dialogue to resolve these issues quickly. Time is of the essence.”

Signed by: Bill Shipley, President (Nodaway); Lindsay Greiner, President-elect (Keota); Dave Walton, Wilton, Mark Vosika, Pocahontas; Chuck White, Spencer; April Hemmes, Hampton; Tim Bardole, Rippey; Steph Essick, Dickens; Casey Schlichting, Clear Lake; Rick Juchems, Plainfield; Suzanne Shirbroun, Farmersburg; LaVerne Arndt, Sac City; Jeff Frank, Auburn; Morey Hill, Madrid; Rolland Schnell, Newton; Robb Ewoldt, Blue Grass; Jeff Jorgenson, Sidney; Warren Bachman, Osceola; Randy Miller, Lacona; Pat Swanson, Ottumwa; Tom Adam, Harper and Brent Renner, Klemme.

Quick facts:

U.S. soybean prices are already $1.65 below the average global soybean price.
According to a Purdue University study, a 25 percent tariff imposed by China on U.S. soybean imports would result in a 65 percent decline in soybean exports to the country. Total U.S. soy exports would drop by 37 percent while U.S. soybean production would decline by 15 percent.
Chad Hart, associate professor of economics and crop markets specialist, Iowa State University Extension, estimates Iowa soybean farmers stand to lose up to $624 million because of higher tariffs implemented by China.
Iowa soybean farmers produced $5.2 billion worth of soybeans in 2017 on production of nearly 563 million bushels.
Soybeans are America’s leading agricultural export, with sales of $27 billion last year.
China is the top market for U.S. soybeans, accounting for $12-14 billion in sales in 2017.
51 percent of the U.S. soybean crop is exported annually.
As of July 5, 2018, soybean futures prices were trading the lowest they had since September 2008.

July 6 statement from Tim Gannon, Democratic candidate for Iowa secretary of agriculture:

“I hope that Scott Pruitt’s replacement at EPA will bring an immediate end to the issuance of waivers for profitable oil refineries that destroy demand for ethanol and drag the price of corn and beans down. Iowa ethanol and biodiesel producers, and the farmers who supply them, deserve to have the Renewable Fuel Standard implemented as Congress intended so that Americans have more options for clean, renewable, American-made fuel.

“This week has seen Canada, Mexico, and China announce new tariffs on American agriculture products in retaliation to the Administration’s actions. Many of these tariffs target Iowa farmers and the pork, soybeans, corn, dairy, and other products we grow and produce. Again, I call on the Administration to take a step back, seek to negotiate an end to the escalating tariffs, and figure out whether there are other tools that would achieve the Administration’s goals without hurting Iowa’s farmers.”

July 6 statement from Abby Finkenauer, Democratic challenger to Representative Rod Blum in IA-01:

Abby Finkenauer, the Democratic nominee for Congress in Iowa’s 1st District, today released the following statement on the threat of an escalating trade war and its negative impacts on the Iowa economy, estimated to cost soybean producers as much as $624 million and pork producers another $360 million.

“I’m disappointed with the irresponsible and ineffective leadership out of Washington, where they have clearly forgotten about Iowa families. Iowa’s agriculture and manufacturing industries are closely tied — when our farmers do well, they buy more combines and plows that are made right here in Iowa. Retaliatory tariffs against our soybean and pork industries won’t just hurt farmers, they’ll also hurt manufacturing.

“There’s no question that China is a bad actor when it comes to trade. But we have to be strategic about our trade policy and make sure it’s focused on protecting Iowa workers. Getting into a reckless trade war on Twitter without a plan to help Iowa families does not meet that test.”

July 6 statement from J.D. Scholten, Democratic challenger to Representative Steve King in IA-04:

The Administration’s devastating and ill-advised trade war with China today could be costing already-suffering Iowa farmers up to $624 million. While Steve King has spent the past week tweeting about Mexico and Denmark, he has shown no such concern about the looming crisis here in Northwest Iowa as farmers are suffering from 10-year record low soybean prices and have seen their incomes decline by 75% since 2012. It’s time for change and for a Congressman that will stand up for Iowans and put the needs of the 4th District first.

  • I've heard some friends essentially say, in private...

    …that most Iowa farmers voted for Trump and they knew his position on trade when they voted for him, so what’s happening now serves them right. Makes me wonder how widespread that attitude is. And not all those friends are urban.

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