In this file:
· Trump's Trade War Is Hurting Farmers, But They Still Think He Can Win It
· Trump Has a Message for the World: My Trade Wars Aren't Over Yet
Trump's Trade War Is Hurting Farmers, But They Still Think He Can Win It
Falling exports and shrinking incomes test support for the president’s aggressive protectionism.
By Shawn Donnan and Shruti Singh, Bloomberg
Apr 11, 2019
Sean Gilbert surveys a two-year-old apple tree that’s head-high, a half-dozen branches growing off it at right angles. With the other trees planted at 3-foot intervals alongside, it’s part of what he hopes will be before long a lucrative wall of fruit.
If Gilbert lets nature take its course, the tree and thousands like it planted on this 20-acre orchard in Yakima, Wash., later this year will bear the first crop of Cosmic Crisp, which he and other growers in the state are calling a new blockbuster apple. If instead he chooses to interrupt the fruiting, he’ll be letting the tree reinvest its energy—think of it as the horticultural equivalent of compounding interest—into growing bigger and stronger faster, which may mean more fruit in the long term.
It’s a consequential decision: Gilbert Orchards has invested about $900,000 into the single Cosmic Crisp plot on which he’s standing. For the 122-year-old family business, Gilbert says, that amounts to a “big bet.” The gamble is all the more risky because growers like him have no experience with this cultivar. Everyone agrees that the cherry red, slightly tart, ever-so-juicy Cosmic Crisp is a good apple for eating, he says, and stays fresh as long as a year in storage. “Everything else is just guessing.”
For Gilbert Orchards, whose products wind up in fruit bowls as far away as India and Taiwan, the decision on whether to delay the first harvest of Cosmic Crisps is complicated by the uncertainty bred by Donald Trump’s trade wars. Mexico and China have hiked duties on U.S. apple imports in response to Trump’s policies. India has threatened to follow suit.
Across Washington state’s apple orchards, growers’ exports have fallen almost 30 percent since last spring. “We’ve been through these kinds of things before, but not with as many markets,” says Mark Powers, president of the Northwest Horticultural Council. “It’s not like we can divert the millions of cartons that are going to India to Costa Rica.”
Spring is supposed to be a time of optimism in rural communities across America. It’s when farmers sow the seeds of prosperity into neat, GPS-calibrated rows and when they pray for just the right amount of rain and sun and for prices to hold up so that when fall approaches, there’s a crop worth harvesting. This year is different. In Washington apple orchards, North Carolina hog farms, and soybean fields along the Mississippi River Basin, the season is filled with doubt. After taking a hit to their bottom line in 2018 of the sort that some say they haven’t seen since the 1980s, farmers in much of the U.S. are hoping for a return to normalcy.
Trump’s determination to upend the global trading system comes at an inconvenient time for one of the nation’s premier export industries. No country has mastered the science of the ever-increasing yield quite like the U.S. has. It’s the world’s leading producer of commodity crops such as soybeans and corn and a major source of apples, beef, pork, and wheat. Agriculture has also been an important backer of successive administrations’ push to seal trade agreements around the world. Pacts such as the North American Free Trade Agreement have spurred agricultural exports, which have grown 170 percent over the past 20 years.
Yet U.S. farm profits have been shrinking since they peaked six years ago, amounting last year to roughly half what they were in 2013. As a result of successive years of bumper crops, prices for key commodities like soybeans and corn are about 40 percent lower than they were in 2013. At the same time, farmers have had to contend with the administration’s crackdown on immigration, which deprives them of migrant labor, and climate change, which most recently took the form of historic floods that devastated Midwestern agricultural states.
The trade wars have come on top of all that. In the year since the Trump administration launched its tariff offensive, the country’s trade partners have retaliated by hiking duties on apples, cherries, ginseng, sorghum, and soybeans, to name a few crops. It’s a familiar pattern: American farmers have long borne the cost for protectionist policies pushed by the country’s industrialists. The 1828 “tariff of abominations” designed to safeguard Northern manufacturers from an influx of lower-priced imports from Britain was opposed stridently in the agrarian South. It led to a political crisis that dogged Andrew Jackson’s presidency and precipitated South Carolina’s first threats of secession.
Conscious of the support he garnered in farm states in the 2016 election and the costs they’ve been bearing, the president last year announced an aid program of as much as $12 billion to cushion their losses. He’s also promised his trade wars will eventually be a boon for the U.S. agricultural economy, whether because of additional Chinese purchases of soybeans and other commodities or the further opening of vital markets such as Japan. “We’re doing trade deals that are going to get you so much business, you’re not even going to believe it,” he told a cheering crowd at the American Farm Bureau Federation’s annual meeting in New Orleans in January. “Your problem will be: What do we do? We need more acreage immediately. We got to plant.”
Still, plenty of people in farm country are fed up with a fight that’s only adding to the widening economic gulf between rural and urban America. “Why should just a few good patriots take it on the chin for the whole of the country?” asks Larry Wooten, the outspoken president of the North Carolina Farm Bureau.
Economists are still trying to quantify the impact of Trump’s pugnacious protectionism on agriculture. One study by researchers at Iowa State University estimated the various tit-for-tat tariffs imposed in 2018 would cost the farm state as much as $2 billion in lost economic activity, much of it in its corn and pork industries...
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Trump Has a Message for the World: My Trade Wars Aren't Over Yet
With EU tariff threat president signals greater uncertainty
Comes as IMF predicts slowest growth since financial crisis
By Shawn Donnan, Bloomberg
April 10, 2019
President Donald Trump is sending a clear message to the economic policy makers gathering in Washington for the IMF and World Bank’s spring meetings: My trade wars aren’t finished yet and a weakening global economy will just have to deal with it.
With his latest threat to impose tariffs on $11 billion in imports from the European Union -- from helicopters to Roquefort cheese -- the U.S. president offered a vivid reminder that, even as he moves toward a deal with China to end their tariff wars, he has other relationships he’s eager to rewrite. That’s not encouraging for global growth, with the International Monetary Fund and others pointing to the uncertainty over Trump’s assault on the global trading system as a damper on business investment and sentiment.
Should they materialize, the new tariffs will be in retaliation for what the U.S. has long claimed are illegal subsidies to Airbus SE and cap a 14-year fight between Boeing Co. and its European rival at the World Trade Organization. Importantly, the U.S. has said it will wait for the WTO, which has already deemed the subsidies illegal, to rule this summer on the exact amount of retaliation allowed.
That is potentially good news for the WTO and the broader system Trump has often said he wants to blow up. The Airbus-Boeing fight also predates Trump and it’s fair to say any U.S. administration would be willing to use WTO-sanctioned retaliatory tariffs.
“It’s a good sign,” Simon Lester, an associate director at the Washington-based Cato Institute, said in an interview. The Trump administration has been “sending some mixed signals about the World Trade Organization, but this action suggests they still value playing by the rules.”
But Trump has deeper issues with the EU. And that’s the problem hanging over the global economy, which the IMF predicts will grow this year at its slowest rate since the aftermath of the global financial crisis a decade earlier.
“The EU has taken advantage of the U.S. on trade for many years. It will soon stop!’’ Trump said on Twitter on Tuesday.
The two sides have kept a fragile truce since July when Jean-Claude Juncker, the European Commission president, and Trump agreed to launch talks on reducing industrial tariffs. The move put on hold Trump’s threat to impose separate tariffs on imports of cars and parts from the EU.
But the negotiations have yet to get underway in earnest with the EU’s 28 members only expected to give the European Commission the mandate it needs to begin talks in the coming days and casting a wary eye on European elections due next month. Moreover, Trump faces a decision in May on how he wants to proceed with the auto tariffs, though White House officials have been telling their European counterparts that there is a high chance that the duties could be delayed.
“It’s very unfortunate that the U.S., once the great advocate and architect of global alliances, seems today to be moving in a different direction,” EU trade chief Cecilia Malmstrom said in a speech in Tokyo after the latest tariff threat by Washington. “We see a broad withdrawal from multilateralism by the U.S.”
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