EXPERTS REPORT WITHDRAWAL FROM TPP TO BENEFIT SMALL TOWN WORKERS, NOT FARMERS
Jan. 26, 2017
Donald Trump's push against trade deals he says have devastated small-town U.S. workers is bringing disappointment to another key piece of his rural American coalition: Farmers and ranchers who heartily supported the president in hopes of less regulation and lower taxes.
Trump's decision Monday to pull out of the Trans-Pacific Partnership, which would have reduced tariffs and strengthened economic ties between the U.S. and 11 other countries, will cost the agriculture industry as much as $4.4 billion a year in potential sales, according to the American Farm Bureau Federation, the biggest U.S. farmer group.
Reopening talks over the North American Free Trade Agreement, which Trump has called a "disaster" and plans to bring up in a meeting later this month with the Mexican president, risks dealing an even bigger blow for agriculture, one of the few sectors of the American economy with a net trade surplus.
"I feel nervous and anxious about what is next," said Ron Heck, who has 4,000 acres of soybean and corn crops in central Iowa. "I know that President Trump has concerns with manufacturing and he didn't take this step lightly, but now we have to wait and see what better deals can be negotiated."
Exports of corn, cotton, soybeans and other goods in the year that started Oct. 1 are estimated at $134 billion, the U.S. Department of Agriculture said in November. The three biggest destinations for U.S. farm products: China, Canada and Mexico. Adding to the malaise, the threat for exports comes at a time when U.S. farm incomes have already fallen for three straight years, the longest slump since 1977.
The prospect of Trump's presidency has always been a mixed bag for farm groups. Positions restricting immigration and trade were less popular, while that was balanced by hopes that reductions in regulations and taxes may offset any negative effects on the industry.
The split on key campaign issues illustrates the difference between "farm voters" and "rural voters" among Trump supporters, said Gary Blumenthal, president of World Perspectives Inc. in Washington. Farmers are iconic in American culture and influential on Capitol Hill, where agriculture groups give more dollars to candidates than the defense and transportation industries.
But manufacturing and service workers are more numerous in rural America, and Trump's message was more narrowly focused on their needs than they were to agriculture's, Blumenthal said.
"When Trump is talking about trade he's talking about factories," a big job generator in the industrial Midwest, where voters in small cities and rural areas gave Trump the victories that won him the White House, Blumenthal said. "Agriculture is a different fit."
That may put farm groups in uncomfortable positions, and not just on trade, he said. Biofuel skeptics have found a home in the new administration, and conservative groups have called for less government spending on agricultural subsidies.
In response, "there's been a concerted effort to remind the White House about the importance of agriculture to the rural vote," Blumenthal said. "There's a feeling that once the administration puts two and two together they'll realize that agriculture's important to jobs in rural areas, and trade is important to agriculture."
After Trump dumped TPP, the Farm Bureau said it was disappointed in the decision. The group's president, Zippy Duvall, a Georgia farmer and friend of the president's Agriculture Secretary nominee, said in a statement the administration needs to work "immediately to do all it can to develop new markets for U.S. agricultural goods."
In lieu of TPP, the administration plans to pursue bilateral trade deals with individual countries that Trump believes will result in better deals for Americans, White House spokesman Sean Spicer said Monday at the daily press briefing.
"We do understand that trade and TPP specifically were a campaign issue," said Tracy Brunner, president of the National Cattlemen's Beef Association, and a fourth-generation rancher in Kansas.
Cattle and beef producers overwhelmingly supported Trump, even with his protectionist stance on trade, because they believed he was much more likely to lessen regulations than his rival Hillary Clinton, who also came out in opposition to TPP, Brunner said. Not having a trade deal like TPP costs the cattle industry $400,000 in sales a day lost to other countries with lower tariffs, such as Australia, according to the cattlemen's group.
Trade is key both for commodity-crop groups, with as much as a third of products like soybeans and corn going to China, and the meat industry, where countries included in the TPP and Nafta for more than 60 percent of foreign purchases for U.S. red meat, according to the U.S. Meat Export Federation.
"In some of these key markets, the U.S. red-meat industry will remain at a serious competitive disadvantage unless meaningful market access gains are realized," Philip Seng, president of the USMEF, said in a statement. "We urge the new administration to utilize all means available to return the United States to a competitive position."
Not every farm group said leaving TPP was a bad idea. The proposed agreement reflected a "continuance of our nation's deeply flawed trade agenda," The National Farmers Union, the second-largest farmer group and a trade-agreement critic, said in a statement. The organization, which has associated with Democratic Party policy positions in the past, said it was pleased with the Trump administration's move.
For now, farmer groups said they still have hope in the new president, looking forward to what's good for them while trying to change his mind on the less favorable.
"We will work with the hand we were dealt, and we will continue to try to explain the benefits of trade in every avenue we have," Brunner of the cattle group said.