December 09, 2021

Tariff talk worries Iowa farmers

International trade disputes could dip commodity prices

As local farmers prepare for the spring planting season, there’s little they can do but watch from the sidelines as the United States and China engage in a trade war, one that could have devastating effects for Iowa products.

With more than $13.2 billion worth of Iowa products exported in 2017, a trade war with China could potentially devastate rural Iowa, leaving little to no market for those products.

Export products are big business in Iowa, one in three rows of soybeans and one of three hogs is exported. With one in five jobs in Iowa dependent on foreign trade, rural Iowans are working in an increasingly global economy. Wade Boehm, who farms outside of Colfax, said he’s worried a trade war would be “catastrophic” for local farmers.

“I know Trump has a reputation of being a negotiator, but with political things like this you can’t just say things without having an effect,” Boehm said. “When the tariffs got put on Chinese products that may have been good for some industries here, but what’s good for one industry isn’t good for another industry.”

Boehm said local farmers are left to watch the trade talks play out. If farmers had known the trade war was a problem last fall, there may have been enough time to shift gears and produce a niche market product like hay, but in early spring, it’s too late. Many farmers have already purchased most of the fertilizer they plan to use this spring, Boehm said.

“You can’t really do a lot now, it’s already too late in the game,” Boehm said. “We’re kind of at the point where we’ve spent our money and now we can just watch the prices crumble if some of these things go through.”

Although many rural Iowans supported Trump’s campaign, Boehm said he thinks many of those same voters are deeply concerned about the potential for a trade war.

“I think the biggest frustration is that there’s probably a lot of people in agriculture that voted for that Trump ticket, and I think they’re feeling burned,” Boehm said.

According to a statement, Trump has directed U.S. Secretary of Agriculture Sonny Purdue to develop a plan to protect farmers. No specifics have been announced by the USDA, but on that same day, Trump reversed his previous position and directed his staff to examine reentering the Trans-Pacific Trade Partnership, or TPP. This free trade agreement with 12 Pacific Rim countries would further open up markets for U.S. goods, including Iowa produced commodities, and was meant to be an answer to China’s growing trade power in the region. Creating a new subsidy for farmers is only a band-aid at best in Boehm’s eyes.

“I just don’t think it’s going to be very well received by the public, any time you put a subsidy on something it would be absolutely necessary to keep farmers profitable if you’re talking about losing 30 percent of your market,” Boehm said.

On Thursday, Iowa Gov. Kim Reynolds and U.S. Senators Chuck Grassley and Joni Ernst met with President Trump and other Ag-state leaders in Washington to talk about the effects a looming trade war could have on producers in Iowa and the Midwest.

After meeting with the president last week, Ernst said she’s hopeful he will consider renegotiating the TPP agreement. Iowans aren’t looking for a handout, Ernst said, they just want a chance to market their goods worldwide.

“Iowa farmers aren’t looking for another subsidy program, rather they want new and improved market access, which is critical to rural economies,” Ernst said. “There is a growing demand for U.S. agricultural products around the world, and American farmers and manufacturers should be able to compete in these markets.”

U.S. Rep. Dave Loebsack, D-Iowa, said he’s concerned about the impact the proposed tariffs will have on Iowa’s farmers, as well. Speaking in Sully earlier this month during a congressional recess week, Loebsack said the President needs to do a better job of listening to rural Americans.

“I think what’s happened here is that the President made a decision without listening to a whole lot of people, and didn’t give serious thought to the consequences of the decisions,” Loebsack said. “I think the president and everybody in this administration need to sit down and take one deep breath and listen to everybody like us in rural America.”

While Loebsack said there’s no question the United States needs to renegotiate the North American Free Trade Agreement, known as NAFTA, and to hold the Chinese accountable for their attacks on American patents and copyrights, he’s concerned the president also needs to be aware that there’s a growing possibility that countries will seek out other trading partners, leaving little or no market for American products abroad.

“We have to make sure that when we do what we need to do to hold them accountable that it doesn’t harm our local economy here in Iowa,” Loebsack said.

Despite all the tough talk, there are some Iowa farms who see the tariff scare fading.

Gordon Wassnaar is a corn and soybean farmer from Prairie City. He sits on the Jasper County NRCS Board and has been a key voice in rural Iowa for developing relationships with international trading partners.

He’s provided expertise in grain markets and sustainable farming practices to members of Iowa’s U.S. Congressional delegation for years, and for the last 15 years, Wassnaar has partnered with Iowa Economic Development — and now the state’s commodity industry groups — to bring more than 100 international visitors to his Prairie City farm during the Iowa Pork Expo for a dinner and to discuss, among other things, international Ag markets.

“I think things are going to work out with China. I hear there have been talks behind the scenes for quite a while,” Wassnaar said. “I think we’re going to get together. We need one another, and I think that’s true for Mexico, as well.”

Wassnaar said Chinese tariffs of both U.S. pork and soybeans would be a “double whammy” and hurt Iowa’s Ag economy. But with the 2018 midterm elections looming, Wassnaar said it would put President Trump and the majority party GOP in a bad place with Midwestern voters going into November with low corn and soybean prices.

“To start slowing down world trade it would be difficult on the price end. I think it would be a disaster for Trump to have corn and soy prices down,” Wassnaar said.

But Wassnaar said it would also be difficult across the Pacific if China were to lose one of its largest grain suppliers.

“On the other hand, I think China sincerely needs our soybeans and pork,” Wassnaar said. “China wants to feed their people. I suspect a lot of this is talk and bluster.”