An Urban's Rural View

In the final countdown to Inauguration Day, the foreign-affairs talk in Washington centers on Russia and cyberwarfare. For farmers and ranchers, though, the incoming administration's preparations for dealing with China, Mexico and economic warfare are more interesting -- and disquieting.

China's economy is about 10 times the size of Russia's. Unlike Russia, China and Mexico are big importers of U.S. ag products. Unlike Russia, China and Mexico have risen as manufacturing centers at the expense of American jobs -- and the president-elect seems determined to do something about that.

During the campaign, Donald Trump promised to renegotiate the North American Free Trade agreement and impose 45% tariffs on imports from China and 35% on some Mexican products. The risk for agriculture is that China and Mexico will retaliate against American exports. In a letter to the incoming president and vice president, 15 top ag groups expressed concern about this risk (http://tiny.cc/…).

"U.S. agricultural exports in FY-2016 were nearly $27 billion to China, over $24 billion to Canada, and nearly $19 billion to Mexico," the groups said. "Disrupting U.S. agricultural exports to these nations would have devastating consequences for our farmers and the many American processing and transportation industries and workers supported by these exports."

Several weeks ago, Trump named financier Wilbur Ross as his Secretary of Commerce. Early in this century Ross made big money betting on tariff protection for companies he invested in. He has called the Trans-Pacific Partnership trade agreement "horrible" for being too soft on China.

But in a CNBC appearance after his appointment was announced, Ross hinted that the president-elect's 45% tariff threat was part negotiating ploy. "Everybody talks about tariffs as the first thing. Tariffs are the last thing," Ross said. "Tariffs are part of the negotiation. The real trick is going to be increase American exports. Get rid of some of the tariff and non-tariff barriers to American exports." (http://cnb.cx/…)

Since then, though, Trump has filled out his top-trade team with candidates who are even more in sync with his campaign rhetoric than Ross. He created a new White House National Trade Council and picked Peter Navarro to head it. To call Navarro a China critic sells the man short; he is the author of a book and documentary film titled "Death by China" (http://tiny.cc/…). The film opens with a Chinese knife stabbing a map of the U.S., which proceeds to spurt blood.

Trump's nominee for U.S. Trade Representative, Robert Lighthizer, also has a reputation as a China critic and free-trade skeptic. He was known as a tough negotiator when he served as deputy USTR in the Reagan administration. In the decades since he has practiced trade law, helping steelmakers, among others, win tariff protection.

Were Ross, Navarro and Lighthizer the president-elect's only advisers on trade, the ag groups' concerns would seem understated, but it's more complicated than that. Trump's appointees include supporters of free trade like Rex Tillerson as secretary of state, Gary Cohn as head of the National Economic Council and Iowa governor Terry Branstad as ambassador to China. Rumor has Larry Kudlow, another trade advocate, heading the Council of Economic Advisers.

Trump will also be listening to two men whose views on trade are less well known. One is a Trump lawyer, Jason Greenblatt, who assumes the newly created position of "Representative for International Negotiations." The other is his son-in-law, Jared Kushner, who will serve as an unpaid senior adviser.

It may or may not be relevant that Kushner has had high-level business dealings with Chinese companies. According to the New York Times, he had joint-venture talks shortly after the election with a tycoon who is married to the daughter of former paramount leader Deng Xiaoping (http://tiny.cc/…).

There are other complications, as well. One is pinning down Ross, who is considered a member of the tough-on-trade trio but has, like Kushner, done deals with Chinese companies. He is also an admirer of Chinese culture and a serious collector of Chinese art (http://tiny.cc/…). While his recent comments on trade have hued the Trump line, over the years he has blown hot and cold on trade questions.

As in any White House, advisers with conflicting views will be vying for influence. Who will have President Trump's ear when tough trade decisions have to be made? No one, probably not even the people involved, knows.

The difference this time is the man at the top. Asia expert William Overholt has pointed out that many presidents -- Carter, Reagan, Clinton, Bush II -- have been inaugurated holding "crazy ideas" about Asia policy, only to change their minds within 18 months (http://tiny.cc/…). None have come to office with ideas as radical as Trump, who has accused China of "raping" the U.S. and committing "the greatest theft in the history of the world."

That trade policy will change in an administration headed by a man who thinks that way is a given. What we have to hope is that the changes are executed with a minimum of collateral damage to agricultural exports.

Urban Lehner can be reached at urbanize@gmail.com

(CZ)

© Copyright 2017 DTN/The Progressive Farmer. All rights reserved.