Senate finance chairman Chuck Grassley has had enough of Trump's foolish and unwinnable tariff wars.
Grassley warns Congress won’t approve USMCA while constituents pay the price for Mexican and Canadian retaliation all aimed at farmers.
Here is the bottom line for Trump, according to a Grassley op-ed: Trump’s Tariffs End or His Trade Deal Dies.
Donald Trump bucked decades of Republican orthodoxy by railing against free-trade agreements. To say I was skeptical of his plans to rip up or renegotiate nearly every major trade deal would be a polite understatement.
I’ve represented Iowa in the Senate for nearly 40 years and have been a family farmer my entire life. I know how important trade agreements are to our country’s farmers. That’s especially true of the North American Free Trade Agreement. Since its passage in 1994, agricultural exports to Canada and Mexico have more than quadrupled. Corn exports increased sevenfold.
Access to global markets is vital for many other industries as well. A Business Roundtable study finds international trade supports 39 million jobs across America, 12 million from trade with Mexico and Canada alone.
But I admit Mr. Trump was on to something. He is the first president to take on China’s abuses seriously, from theft of U.S. intellectual property and forced technology transfers to anticompetitive subsidies. He’s opened Argentina’s market to U.S. pork for the first time since 1992. A new deal with Japan could happen by year’s end.
I’ve met with congressional colleagues, as well as U.S., Canadian and Mexican trade officials, to discuss how our nations will secure legislative approval of USMCA. A significant roadblock is the administration’s tariffs on steel and aluminum and retaliatory Canadian and Mexican tariffs on U.S. products. These levies are a tax on Americans, and they jeopardize USMCA’s prospects of passage in the Mexican Congress, Canadian Parliament and U.S. Congress. Canadian and Mexican trade officials may be more delicate in their language, but they’re diplomats. I’m not. If these tariffs aren’t lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place.
Many Americans have been harmed by retaliatory tariffs. Mexican tariffs on U.S. pork, to take one example, have lowered the value of live hogs by $12 an animal. Iowa is the top pork-producing state in the country. That means jobs, wages and communities are hurt every day these tariffs continue—as I hear directly from Iowans. It’s time for the tariffs to go.
The administration can take the lead by promptly lifting tariffs on steel and aluminum from Canada and Mexico and working with allies to address the true source of overcapacity: China.
Right and Wrong
Grassley is right about one major thing and but wrong about many others.
He is correct that farmers have borne the brunt of tariff retaliations. But those retaliations also include the EU and China.
Grasley notes a deal with Japan is in the works. Ho hum.
last year, eleven nations signed an Asia-Pacific Trade Agreement previously called the Trans-Pacific Trade Agreement (TPP). The US did not sign. The deal lowered tariffs on agricultural goods.
Since the US did not sign, US crops face substantial tariffs in Japan. On agricultural, Australia is a primary beneficiary.
Trump has a hell of a lot of negotiating to do, just to get back to where we were. It won't happen. Japan will demand and win concessions from Trump.
Grassley blames China for steel overproduction. That's another ho hum.
If China is supplying the US with subsidized steel, the US is the beneficiary and China is the loser. The US has far more manufacturers that use steel than produce steel.
The auto industry was against these tariffs. So was anybody with an ounce of economic sense.
Republican Rifts Growing
Grassley's concern is agriculture, not steel. Other senators have other concerns. The manufacturing states may or may not be that concerned about agricultural goods.
Don't expect much out a trade deal with China but do expect Trump to brag mightily about it. China will buy more soybeans and grant US corporations more access to China. The former will return to the status quo, the latter China was likely about to do anyway.
Even if one foolishly believed tariffs would solve anything if carried out long enough, China knew full well that Trump would have to cave in and work out a weak agreement for political reasons.
The US has presidential elections every 4 years, China thinks in terms of decades.
Dairy Farmers Blame Trump
Meanwhile, please note Wisconsin Dairy Farmers Going Bankrupt in Record Numbers, Blame Trump Tariffs.
USMCA is dead unless Trump backs down on tariffs, and Democrats may sink it anyway.
Trump's trade scorecard is zero.
Mike "Mish" Shedlock