Lowell Carlson

Lowell Carlson

The mere mention of the word “tariff” will get you swift reaction whereever farmers gather for coffee these days. Tariffs are now a litmus test for the true Trump believer. If the economy goes into recession in 2020, a growing possibility, tariffs are going to bear considerable blame.

Tacking billions in tariffs on Chinese manufactured imported goods has resulted in rippling higher prices from the wharf to the retailer’s shelf. None of this addresses the catastrophic imposition of Chinese tariffs on American soybeans, corn and wheat. 

Iowa corn growers already have seen buyers from Mexico, our biggest export corn market, turn instead to Argentina and Brazil where no one is calling for a wall and demanding Mexico build it.

Mr. Donald Trump’s signature tweeting in May, threatening tariff trade war with China, sent Bloomberg’s Grain Subindex to a 42-year low.

Contrary to Mr. Trump’s assertion that tariff wars are easily won, they have figured in national and world job loss, withering consumer demand and retaliatory levies, not to mention actual war in our country’s history. For some longtime buyers in foreign countries we are no longer a reliable trading partner.

The president has managed to sweep from the table 40 years of hard, tedious work by farm commodity groups in developing foreign relationships and new markets. True to practice, retaliatory tariffs cripple farmers trade initiatives and crucial export markets.

After all, it was a series of tariffs on essential goods levied on American colonists, known as the Townshend Acts, in the 1760s that culminated in the Boston Massacre and the Sons of Liberty Boston Tea Party. The “massacre” part was truly a media creation after injuries were luridly described.

Tariffs truly are taxation without representation, a fact American colonials understood. At various times, in the name of protecting domestic manufacturing, we have faced higher prices for goods we’ve grown accustomed to importing from other countries.

No mistake about it, tariffs do help certain industries, which use them to immediately raise prices or expand production. Take Trump’s steel and aluminum tariffs on imports, for example. Steel mills reacted to just the mention of a tariff by raising their prices. Back in the era of the War of 1812, it was New England’s fledgling textile industry.

Higher steel costs for Deere and Company, along with the drag of tariffs on farm commodities, have figured in the farm equipment giant missing quarterly profit estimates for five straight quarters.

Simply put by the New York Federal Reserve, this current tariff war, launched by an American president will be paid for by the American consumer. First the wall was going to be paid for by Mexico. Next, the Treasury was going to take in so much money in tariffs paid by the Chinese. In the real world neither is likely. In 2018, the Treasury took in about $41 billion in tariff revenue, about 1 percent of all federal revenues.

You know there is something fundamentally wrong when the average consumer is smarter about tariffs than the president of the United States.

It could be Trump is using the threat of tariffs as leverage in bargaining with other countries. With farm income tanking badly, the Trump White House is proposing a tariff relief package, which amounts to nothing more than pennies on the bushel. 

It is a drop in the bucket compared to the production costs farmers incur putting in a soybean crop. The multi-billion dollar relief plan sounds impressive until you see how little it covers spread among the thousands of producers. In the meantime, the federal deficit went up 17 percent in the first year alone of the Trump administration. It’s now well over $779 billion.

Farmers don’t want, in fact, can’t survive, on a dole like this. They need markets.

What has happened to Republicans? Once the champions of free trade and wary of tariffs, they stood behind manufacturers during the Cold War as we used trade and capitalism to combat Soviet style, central planning, and top down control. Trump announces we’ve been suckers about trading and, bingo, the faithful comply.

The definition of a cult: the first principle is to convince people everyone else is lying to them. 

In 1930, in an effort to stop the hemorrhaging of Wall Street, Congress passed and Herbert Hoover signed the disastrous Smoot-Hawley Tariff act, which is often held as an example of self-inflicted injury to our own economy. The act raised U.S. import duties to protect American businesses and farmers but added more strain to international economics during the Great Depression.

Trump’s tariff war was to punish the Chinese for unfair trade practices. We all agree they have been guilty of illegal, damaging practices. The remedy, though, of imposing higher costs on consumers here and crippling farm income with pass-through tariff costs does not seem to be an answer. 

It will reduce Chinese sales here, of course, but we will pay for the Trump tariff trade war policy right here in America.