On tariffs, many farmers break sharply with Trump
patterns of thought
President Trump's soon-to-be implemented tariffs on steel and aluminum are driving up the cost of farm equipment, and could lead to retaliation from other countries against US agricultural exports, at a time when farmers are already being squeezed by historic low prices for crops.
Wamego, Kan., and Lincoln, Neb.—Glenn Brunkow eases his pickup past the land his great-great-great-grandfather homesteaded in the 1860s, pointing out the rich soil where he’ll grow soybeans this year, and then turns into a cow pasture.
It’s calving season, his favorite time of year in Kansas.
“This is kind of like Christmas, coming out here every morning,” says Mr. Brunkow on a brisk March day, stopping to wait for a calf in his path as it takes a long, deep draught from its mother’s udder. “I like coming and finding a new calf nursing.”
But farmers here in Trump country recently got a far less welcome present from Washington: tariffs on steel and aluminum. It’s a 1-2 punch that hits hard in the Heartland. Not only are the soon-to-be implemented tariffs already driving up the cost of farm equipment, but other countries are threatening to retaliate by targeting US agricultural exports.
This is just the latest trade move that could have serious ramifications for farmers – a key part of President Trump’s political base. Mr. Trump’s decision to withdraw from the Trans-Pacific Partnership (TPP) trade deal has cut off beef producers from some of the world’s fastest-growing markets. And overhauling the North American Free Trade Agreement (NAFTA) could jeopardize relations with two of American agriculture’s best trading partners – Mexico and Canada.
“For the most part, we’ve been really pleased with Trump’s policies…. But we are really concerned about trade,” says Brunkow, a board member of the Kansas Farm Bureau who is in Washington this week meeting with his state representatives. “I don’t think that Trump understands the yin and yang of trade.”
Many Midwestern Republicans in Congress have also criticized the tariffs.
“Every time you do this, you get a retaliation,” Sen. Pat Roberts (R) of Kansas, who chairs the Senate agriculture committee, recently told reporters. “And agriculture is the No. 1 target. I think this is terribly counterproductive for the ag economy, and I’m not very happy.”
Invoking national security
In an unusual move, the president justified the tariffs, which are set to take effect on March 23, by invoking a rarely used section of the Trade Expansion Act of 1962. The White House argued that steel and aluminum are crucial to producing certain military hardware. It also said that the low prices of imports have weakened the US steel and aluminum industries, which have lost nearly 100,000 US jobs since 2000.
The new tariffs – 25 percent for imported steel and 10 percent for aluminum – were welcomed by Trump supporters and even some Democrats in the Rust Belt.
But they couldn’t have come at a worse time for farmers, who are facing historically low prices for crops and drastically eroded purchasing power.
Kevin Cooksley of Nebraska describes his current situation by offering an anecdote: In 1948, his grandfather could sell a yearling bull and use the money to buy a new pickup truck. Today, Mr. Cooksley says, he would have to sell around 15 bulls to afford such a purchase.
Some have criticized Trump for playing one part of his base off another, choosing manufacturing over agriculture. “It is dismaying that the voices of farmers and many other industries were ignored in favor of an industry that is already among the most protected in the country,” said the US Wheat Associates and the National Association of Wheat Growers in a joint statement.
Part of the solution may lie in shifting the trade conversation from its current focus on winners and losers, says Darci Vetter, who grew up on a Nebraska farm and served as America’s chief agricultural negotiator from 2014-17, including on the TPP.
“Instead of using those who feel really left behind by the global economy as a sort of rallying point, why haven’t we used them as a consensus-building point?” she asks in an interview. “We haven’t put our energies into saying what would make our economy more productive, what would make our job situation more stable, especially in those communities that have found that they’ve not been on the winning end of global competition.”
Trade under attack
While there has long been a consensus in America about the importance of trade, that has changed in recent years, according to Brian Kuehl, executive director for Farmers for Free Trade, a bipartisan lobbying group that was formed in response to the 2016 election, in which all the candidates targeted trade.
“I think from our perspective, alarmingly, [that consensus] has eroded within agriculture – which is a little bit of a head-scratcher, because if there’s one industry in the United States that benefits unambiguously from trade, it’s US agriculture,” said Mr. Kuehl, speaking at a March 13 symposium at the University of Nebraska–Lincoln.
The US agricultural economy exported $135 billion worth of products in 2016, including roughly half of all rice, wheat, and soybeans produced in the US. Nebraska is one of the most prolific exporters – No. 1 in beef, and among the top five in corn and soybeans.
“It’s very short-sighted to have tariffs,” says Roger Wehrbein, a former legislator and beef producer from eastern Nebraska who has been studying tariffs in the early 1800s. “They have never worked in history.”
The White House has singled out China, but it ranks 4th in US aluminum imports – and 11th in steel, well below Canada and Mexico, though those two countries will be granted temporary exemptions.
Some speculate that Trump is using the tariffs as leverage in NAFTA negotiations. But the danger is that other countries could start relying more on non-US suppliers during this time of uncertainty, and US ag producers will then be hard-put to reenter those markets.
That’s also a concern with TPP, says Don Hutchens, who worked for 28 years with Nebraska Corn Board to open new markets.
“That discussion is going on [between] 11 countries without us,” he says. “Unfortunately, if you’re not at the table, you don’t have a voice…. And if you don’t have a voice for very long, people kind of forget who you are. And once they realize they can get commodities from other countries at comparable prices and quality, then we’ve really shot ourselves in the foot.”
Take, for example, China’s imported soybean market, where US market share is already slipping. Brazil has increased its soy exports to China 270 percent just in the past year. If China retaliates with tariffs against US soybeans, Brazil could expand its production to fill that void, says Steve Wellman, director of Agriculture for Nebraska.
“I don’t think it would be easy to recuperate from,” says Mr. Wellman, a farmer and former president of the American Soy Association.
For Brunkow, the fifth-generation Kansas farmer, it's not just about preserving his family’s farm business, but America’s.
“That’s one of the things that’s always made the US so strong, is we’ve had a great ag foundation,” he says, as he rolls back up his driveway, where lambs are tottering around a paddock with their shaggy moms. “And we need to keep that.”