Recent weeks have offered Nebraska ag producers both a rose and its thorns, in terms of trade, in quick succession.
The proposal to offer what amounts to a $12 billion bailout for farmers to deal with expected drop-offs in sales and farm income amid plunging futures prices represented the latest costly, self-inflicted wound in an escalating trade war limiting foreign markets to farm products.
Then, President Donald Trump announced that the U.S. and European Union were retreating from the brink of a separate trade war after agreeing in principle to suspend a series of American tariffs and retaliatory duties from the EU. Of particular importance to Nebraska, Europe pledged to increase imports of American soybeans following the accord.
A valley, followed by a peak. Nebraska farmers and ranchers — and, in turn, the state economy largely dependent on their industry — would be glad to step off this trade rollercoaster for a few minutes. Amid the maddening inconsistency, ag producers’ needs remain unchanged: Better access and fewer barriers in overseas markets are vital to restoring free-falling commodity prices and farm incomes.
To their credit, most farmers and trade groups opposed the administration’s bonkers short-term plan to cover the cost of lost sales through direct payments to producers and government purchases of certain goods.
That will only cost more money — something Washington is far better at spending than collecting. Rustling up $12 billion on the credit will only increase the federal debt, when taxes from the sales of these outputs would bring actual cash flow.
Tariffs hurt consumers, who ultimately pay these taxes on imports. Tariffs hurt producers by reducing demand. Removing barriers benefits both sides.
The EU deal Trump announced outside the White House is only a handshake agreement. Still, it’s among the biggest victories for free trade in the first 18 months of his presidency. Until pen touches paper, anything can happen, but Trump said the right things about securing European purchases of American goods and eliminating tariffs and subsidies.
The EU is the nation’s fifth-largest market for ag exports, according to the U.S. Department of Agriculture. It includes seven of Nebraska’s 25 largest export markets in 2017, per the U.S. Census Bureau. (Another, South Korea, was addressed in a separate trade deal approved earlier this year.)
Still, negotiations for the North American Free Trade Agreement remain ongoing, with Nebraska’s two largest trade partners — Canada and Mexico — on center stage. And while a hard line is needed regarding theft of intellectual property by China, the state’s biggest ag buyer, both nations’ threats of more and more tariffs miss the real point contention while inviting collateral damage.
Progress on trade has been hard to come by under Trump. But this wave of productivity must step forward toward more agreements, not backward to protectionism and payouts.