In response to President Donald Trump’s tariffs on aluminum and steel from China and other countries, China announced that it would impose tariffs on 128 American products. The White House then announced its plan to impose tariffs on 1300 Chinese products including medical devices, flat screen TVs, and batteries. China responded announced tariffs on $50 billion worth of American goods.
Pork and soybeans are among the American products that China intends to place tariffs on which will make an impact on Iowa’s agricultural economy.
Caffeinated Thoughts reached out to candidates running for Iowa Secretary of Agriculture.
Current Iowa Secretary of Agriculture, Mike Naig, was Deputy Secretary of Agriculture when he was appointed by Governor Kim Reynolds to fill the vacancy left when former Secretary Bill Northey was confirmed by the U.S. Senate as Under Secretary of Agriculture for Farm and Foreign Agricultural Services at the U.S. Department of Agriculture.
Naig, a Republican, is running to be elected to the job and was endorsed by Northey. Naig in an email said that the potential impact of the tariffs is significant.
Exports are a vitally important market for our ag products. Iowa farmers have been dealing with a challenging economic climate for several years and we need to be doing everything we can to protect and build markets for our agricultural products, not potentially increasing barriers to trade,” he said.
“That said, there are real challenges in trade our relationship with China and I understand President Trump’s interest in making sure we truly have free and fair trade,” Naig said.
“As for the impact, we are still too early to know, but the potential impact is significant. On the pork side, total U.S. pork exports to China are worth $1.16 billion. With an additional 25 percent duty on all the pork going into China, that will have an impact. Also, while soybeans not included in the current list of increased tariffs imposed by China, there is great concern soy could eventually be another target. China is the largest purchaser of U.S. soybeans, consuming nearly a third of U.S. production, worth $14 billion annually,” he said.
“More broadly on trade, there have been ups and downs with the Trump administration. The recent completion is of the Korea Free Trade agreement is very good news for agriculture. Obviously, we are still waiting on NAFTA, but it is critically important that be completed without hurting our ag trade with our two leading markets,” Naig added. “Hopefully all of these negotiations can be completed quickly and minimize the disruption to our trading relationships.”
Craig Lang, a former Iowa Farm Bureau Federation president and 5th generation dairy, beef, and crop farmer from Poweshiek County, is also running for the Republican nomination. Lang said a trade skirmish with China is bad for the Iowa economy and he called on federal officials to “find a solution to get us back on the right track.”
He believes trade embargoes and tariff wars hurt America’s reputation as a reliable producer of agriculture products and drive customers to other sources, such as Brazil and the European Union.
“Iowa’s farmers have always stepped up and done what’s right for our country, but all too often they get stepped on by government policies that hurt their ability to produce and make a living,” Lang said. “Once again, federal policies are hitting agriculture hard. Farmers already have enough unpredictability in their lives with the weather and other factors. I hope the Trump administration will ease tensions, take action that encourages China to remove its tariff on pork and other agricultural products and foster the type of free trade that benefits American agriculture instead of hurting it.”
“Farmers are already struggling with profitability; they shouldn’t be forced to shoulder the burden of tariffs,” Lang added. “I would encourage the current administration to recognize the impact this situation has already had on the agriculture sector and the extremely negative effects it will have going forward. The administration needs to find a solution to get us back on the right track in short order.”
Chad Ingels, a northeast Iowa farmer and served as an Iowa State University Extension Watershed Specialist for 17 years, is also running in the five-way Republican primary for Iowa Secretary of Agriculture told Caffeinated Thoughts that the public negotiation of tariffs on agricultural products creates uncertainty.
“The public negotiation of tariffs on agricultural products is certainly impacting Iowa farmers and the rural economy, primarily due to the uncertainty it creates. Since the first of February, the hog market has fallen about 30%. And there has been significant, initial market reaction today due to the possibility of soybean tariffs. About half of US soybean exports go to China and they are the number four importer of US pork,” Ingels said.
“However, it’s important to note that these are proposed tariffs and President Trump has a history of using tough rhetoric during negotiations. Commodity groups, state agriculture secretaries and the ag industry must continually work to educate Congress and the White House on the importance of free and fair trade for our agricultural products. This trade dispute is a reminder that we on the state level are subject to policies that we may not have much control over and need to work to develop and expand market opportunities around the globe by taking every opportunity to present our high quality Iowa-grown products to potential and current buyers,” he added.
Ray Gaesser grows soybeans and corn on the 6,050 acres he farms in Adams County near Corning. Gaesser is also running for the Republican nomination.
“Free and fair trade is vital to agriculture and all of America. For example, agriculture is 30% of Iowa’s economy and 20% of Iowa agriculture is directly related to exports. For each Iowa farmer, there are a potential 80,000 customers globally. This step against Iowa pork, soybeans and other products is proof that China is retaliating, even against its own interests,” Gaesser told Caffeinated Thoughts.
“In the U.S., pork producers and fruit producers will both be severely and negatively impacted. In China, consumers will pay much higher prices while Chinese companies such as the privately owned WH Group (which bought Smithfield foods in 2013), the world’s largest pork company, will face serious consequences that will be felt worldwide.
“In my 50 years as a farmer, what I’ve witnessed is that, starting right here in the Heartland, these kinds of unfair trade practices by the Chinese will devastate livelihoods, directly hurting farmers, and rippling through industries and ultimately, local communities,” Gaesser stated.
Gaesser supports President Trump’s efforts.
“President Trump has taken important steps by reforming our antiquated tax system and reining in long-standing regulations. Our Congressional delegation, Ambassador Branstad and the recent ag mission trip to China are examples of taking responsibility and building relationships. As a leader or participant in more than 50 trade missions, I know that educating consumers, developing relationships and building trust make a difference on a global scale. With the team we have in place, Iowa agriculture can and will thrive,” he said.
“A trademark of this Administration has been creating opportunities and opening new markets for American industries. We must all work together for the long-term, such as considering infrastructure funding for steel and aluminum industries to limit the negative impact of these misguided policies from the Chinese government in the future.
“For example, farmers have modernized and used technology to produce more while using less input. Farmers already were under duress due to declining NAFTA exports and low commodity prices. Research and technology advancements, low-interest loans and other federal programs could relieve some of the stress that farmers are feeling. Most critically, we need to implement the art of the deal rather than polarization to fix this,” Gaesser added.
Update: Tim Gannon, the presumptive Democrat nominee, responded to Caffeinated Thoughts’ request for a comment.
With the uncertainty in futures’ markets following China’s announcement of tariffs on a host of U.S. products including Iowa soybeans, pork, beef, corn, and ethanol, it makes me wonder if the Trump administration realizes how bad this news could really be for Iowa’s economy. I sincerely hope that backchannel negotiations will remove the tariffs China has placed on one of our largest export markets. But through both Administration word and deed, we have already lost market share for our products in important markets we have worked hard to open to our goods over time. With already low commodity prices, and farm income forecast to fall for the 5th time in the last 6 years, Iowa farmers and our state cannot afford this dangerous action. It will have negative impacts for farmers, equipment dealers and other small town businesses, and on Iowa’s manufacturing businesses that depend on a strong ag economy.
As Secretary of Agriculture, I will fight every day to not only keep important export markets open, but to also find new ways we can use the products we grow and raise so we can build demand increasing farm income while creating new jobs around the state.
Caffeinated Thoughts also reached out to Dan Zumbach (Republican) for comment for this article, and will update this article if he replies.