Inside D.C.

Trump and trade

I’m convinced President-elect Donald Trump should come clean on where he stands on trade broadly and agricultural trade specifically.  There’s too much confusion, too much market angst to allow rumor, media interpretation and campaign rhetoric to stand in place of plain talk about the importance of trade, particularly to production agriculture.

Presidential candidates, indeed, sitting presidents, use ag trade as their go-to statistics when talking about the U.S. economy and the nation’s balance of trade.  Generally, agriculture is the only positive component of that trade equation.  However, anti-globalism, specific nation criticism and a highly public aversion to multinational/regional trade deals is a surefire way to guarantee that lone bright spot in our balance of trade begins to fade.

I’m also convinced Trump uses issue exploitation – trade and lost domestic jobs, drug pricing and imports, the cost of a new Air Force One or a fighter jet – to get a specific industry’s attention in a way never used before, namely call out the most obvious public relations problem/negative stereotype and swear you’ll end it in a heartbeat if given half a chance.  Kind of a “speak really loudly and carry the biggest darn stick you can find” approach.  This strategy short-cuts the process, waking up most CEOs, who then publicly praise the president for “engaging with industry.”

We know Trump is no fan of multinational trade pacts.  For 16 months, through the primary battles and the general campaign, he vilified the Trans-Pacific Partnership (TPP) as the poster child for badly negotiated treaties.  Trump contends TPP will cost the U.S. too much, particularly when it comes to the outflow of jobs overseas.  However, there’s little mention of a net farm income increase of $4.4 billion, driven by an increase of direct U.S. agricultural exports of $5.3 billion per year, and the subsequent creation of 41,000 new jobs.  Yet Trump says one of the first things he’ll do when he’s officially the 45^th president of the U.S. is withdraw from the TPP gang.

Trump hates the North American Free Trade Agreement (NAFTA) – “the worst trade deal we ever signed” – and vows to renegotiate or withdraw from NAFTA early on in his tenure.  The Mexican and Canadian government are being coy, saying they’re more than willing to talk about NAFTA, but…

At the same time, Trump intends to take a very straightforward trade negotiating system and complicate it significantly.  Putting the Secretary of Commerce in charge of all treaty negotiations, with the U.S. Special Trade Representative (USTR) reporting to the secretary, then toss in the chair of the newly formed White House National Trade Council, and spice it up with a “special representative for international negotiations,” creates, well, a less-than-straightforward system.

At the American Farm Bureau Federation’s (AFBF) annual meeting last week in California, the message was clear:  AFBF and its million-plus members are “very concerned” about Trump’s trade talk.   At a convention session on the meat industry, members heard that if Trump’s very public criticisms of other countries lead to U.S. export market losses, the situation is inevitably worse for the livestock side of the equation as crops can be stored in hopes of better markets, live animals and birds, not so much.

AFBF President Zippy Duvall told reporters, “We’re always the whipping boy when it comes to tough talk and trade fights; we’re always the first one that gets hit.” Amen, Brother Duvall!

Trump needs to worry less about form and more about function and outcome when it comes to U.S. trade.  The bottom line for agriculture – and a reality getting too little attention – is that continued growth in domestic livestock and poultry production relies on increasing overseas sales.  Farmers and ranchers routinely produce more than is needed to meet domestic demand because export demand for U.S. production is the key to expansion and profit.  And if livestock and poultry producers are raising more and selling more in a global marketplace, then input industries, i.e. commercial feeds, animal drugs, equipment, etc., also reap the benefits of increased demand and expanded sales and profits.

These are all good things.