Montana producers know intuitively that a “bull in a china shop” approach to trade does not work. Those concerns began when President Donald Trump withdrew from the Trans-Pacific Partnership (TPP), which according to the American Farm Bureau had the potential to increase annual net farm income for American producers by over $4 billion. Joining 11 other Pacific Rim countries in the TPP would have demonstrated America’s leadership in the area and given us greater leverage in negotiations with China. The 11 other countries signed a TPP agreement without the U.S. which allows member countries like Australia and Canada to sell wheat and beef to Japan, also a member of the new TPP, at prices that are now more competitive to the U.S. than before the TPP. If the U.S. had not withdrawn from the TPP that Mexico, Canada and the U.S. had all agreed to then the TPP would have superseded any lesser environmental and labor requirements in NAFTA, which would have been positive for the United States.
The second turn of the bull in the china shop is the threat to withdraw from NAFTA. Whether you were for or against NAFTA when it was negotiated over 20 years ago, now the reality is that markets and contractual arrangements are dependent upon its continued existence. Withdrawal from NAFTA would be financially devastating to American agriculture. Even the ongoing negotiations and the threat of U.S. withdrawal have motivated Mexico to diversify its sourcing of corn and wheat from the U.S. to South American countries. This will hurt U.S. grain prices both in the short term and in the long term.
The third turn of the bull in the china shop was dramatically increasing tariffs on steel and aluminum imports from other countries. Canada, Mexico, the European Union, and China have stated they plan to retaliate against Trump’s tariffs with tariffs on U.S. exports, including agricultural products. This appears to be the first step in a trade war, where American producers will suffer from a decline in prices for their commodities and face increased costs from imported inputs.
If that wasn’t enough the bull in the china shop continued his destruction with more turns. Trump threatened to add an additional $50 billion worth of duties on Chinese products. China reacted with a threat to reciprocate with $50 billion in tariffs on products from the U.S. including agricultural products like soybeans, wheat and beef. Trump then threatened another $100 billion in tariffs and China said it would retaliate with the same amount. China then began replacing U.S. soybeans with soybeans from Brazil and Argentina.
Montana producers need our congressional representatives to stand up for agriculture to prevent us from continually being victimized by this trade war. Representative Greg Gianforte had an opportunity to do just that when he met with Trump’s new economic advisor Larry Kudlow. However, according to an article in the Billings Gazette on April 19, Gianforte failed to bring wheat or the TPP into the discussion on trade with Kudlow. Montana producers need hired hands in D.C. that will actually work for us and represent our interests. Gianforte is not getting the job done and needs to be replaced. Kathleen Williams and Jon Tester will stand up and represent Montana producers. They know how important agriculture is to Montana and that we must strongly present our position when trade issues are being considered.
Ron de Yong, former director
Montana Department of Agriculture