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Missouri exporters worry about effects of Trump-induced trade war

Missouri exporters worry about effects of Trump-induced trade war

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WASHINGTON • “This thing is scary,” said Missouri Farm Bureau President Blake Hurst.

“This thing” is President Donald Trump’s announcement that the United States would impose steep tariffs on imported aluminum and steel. It’s a move Trump says is necessary to challenge arrangements he says lead to huge trade deficits for the U.S.

His move has been applauded in some congressional districts with steel or aluminum manufacturers, including the Metro East district of Rep. Mike Bost, R-Murphysboro, where steelmakers have either shut down or laid off workers.

But there has been widespread resistance from members of Congress, many of them Republicans like Trump. Echoing others in Republican congressional leadership, Sen. Roy Blunt, R-Mo., expressed worries over a trade war.

And for people such as Hurst, who raises corn and soybeans near Tarkio, Mo., it’s a bottom-line issue.

Trump has said the U.S. is being taken advantage of by trading partners. He often mentions China, both in the steel production as well as the broader trade markets. Exporters worry that the war will spread far beyond steel and aluminum.

“Half of all soybeans (in Missouri, and nationally) are exported, and half of those go to China,” Hurst said. “They are a fourth of our market.”

In 2017, according to the Census Bureau, Missouri exported about $14.1 billion in products, ranging from trucks to motorcycles to corn, soybeans and beer. That was about 1 percent of all U.S. exports last year, the Commerce Department said.

Canada is Missouri’s primary export destination, as it is for 34 other states. Canada imported more than $5.1 billion in Missouri products in 2017, followed by Mexico at more than $2.5 billion, and China at roughly $926 million.

Canada and Mexico are primary partners in NAFTA, the North American Free Trade Agreement.

Some Republicans worry about the escalating effect of a trade war that starts with steel and aluminum.

Blunt said Tuesday that Trump’s “trade policies are not very clear right now, and for those of us that support trade (they) are troublesome. We will see what happens on the steel and aluminum issue.”

Sen. Claire McCaskill, D-Mo., said that she was “very concerned we’re starting a trade war that’ll do nothing but punish Missouri’s manufacturing and agriculture sectors.”

And it’s not just retaliation fears for some Missouri exporters.

“You think about when you drive a combine out into the field, probably not the first thing you think about is the pounds of steel that are in that combine, but it is a very big number,” the Farm Bureau’s Hurst said. “So we are looking at increases on the cost side. There is, I think a real concern.”

McCaskill’s possible November election opponent, Attorney General Josh Hawley, endorsed Trump getting tougher on one trading partner.

“Trade is good for Missouri workers and farmers when our trade partners follow the same rules we do,” he said. “Most of our trade partners do. But one in particular doesn’t: China. China systematically abuses the global trade system, and we should respond firmly to defend American workers.”

But some Republicans, Blunt included, are concerned that Trump’s relatively narrow actions on one industry would invite retaliation, in particular on agriculture.

“When there is retaliation in trade it almost always first goes to commodities because nobody is better at that than we are and it is our leading export,” Blunt said.

Farmers were already nervous about what would come of Trump-ordered renegotiation of the North American Free Trade Agreement.

White corn — produced for human, rather than animal, consumption — that is grown in some of the richest farmland of Missouri has become an important export to Mexico, where it is used to produce tortillas. Farmers say that retaliation on products such as white corn could hurt the state’s farmers, who have already had five years of depressed prices from all-time highs earlier this decade.

“We obviously keep saying over and over again, that there are probably some benefits that can be had from a renegotiation of NAFTA, but the first thing to do is no harm,” Hurst said. “In the past week I think that rhetoric has been escalated by the president, and it is very much a worry at the farmer-member level.”

Mexico and Canada “are basically two of the largest three” consumers of Missouri farm exports, he said. “Corn from my farm, a great deal of it goes straight to Mexico. Farmers are aware of this. They are concerned about it.”

Trump this week said he doubted a trade war would ensue from his actions. But he also tweeted that winning such wars was “easy,” and he returned to themes that he has been pronouncing in speeches for 20 years: that the U.S. has been taken advantage of in international trade deals, and that the U.S. needed to do more to protect vital national security industries such as steel.

“The president is very confident that if (a trade war) is where we end up we certainly would win it, but that is not the goal here,” White House press secretary Sarah Huckabee Sanders said. “The goal here is to get fair, free and reciprocal trade.”

But some, citing Trump’s changing rhetoric on other issues, said the uncertainty could upset delicate trade balances and global markets.

The Missouri Farmers Union initially opposed NAFTA when it passed in 1993, said the organization’s President Richard Oswald, also a grain farmer from Fairfax, Mo.

“But we have been in it long enough, I think, that agriculture in the United States is pretty much dependent upon this NAFTA agreement to sort of keep the whole thing leveled off, and going smooth,” he said. “We don’t really need a bunch of wrinkles in demand that could negatively affect prices now, because prices are already so close to break-even it wouldn’t take a whole lot to be a disaster for us.”

As a result of Trump’s actions, major trade partners are already threatening retaliation that could hit Missouri exports. The European Union said it is contemplating retaliation on everything from cars to jeans to agricultural products. Turkey has threatened the same on cotton, which is grown in southern Missouri.

“If the EU wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a tax on their cars which freely pour into the U.S.,” Trump responded on Twitter.

Missouri exporters said that they are worried that Trump’s history of taking positions and then backing away does damage no matter how this ends.

“I am not sure how to quantify what Trump is doing on trade, because I can’t tell from listening to him one day to the next exactly what he thinks, and that is what is kind of disconcerting,” said the Farmers Union’s Oswald.

The Missouri Farm Bureau’s Hurst said that “God only knows” how this issue will be resolved.

“I don’t know that anybody knows,” he said. “I want to be very careful how I say this, but if news reports are to be believed there are people in his own administration who were surprised by his comments. So all of us are waiting to see what happens next.”

Missouri Gov. Eric Greitens’ spokesman did not respond to requests for comment. Neither did the state’s Economic Development Director Rob Dixon. The Missouri Association of Manufacturers also did not respond to an interview request.

But former Missouri Gov. Matt Blunt, who now heads the American Automotive Policy Council, which represents major automakers, including those that provide jobs in Missouri, said he was “concerned with the unintended consequences the proposals would have, particularly that it will lead to higher prices for steel and aluminum here in the United States, compared to the price paid by our global competitors.

“This would place the U.S. automotive industry, which supports more than 7 million American jobs, at a competitive disadvantage,” Matt Blunt said.

Bost, who faces a tough re-election in November, has been one of the few voices in the St. Louis-area congressional delegation who has been outspoken in favor of Trump’s moves.

He called Trump’s move a “bold step forward,” adding that “the steel industry has been vitally important to Southern Illinois for decades.”

He said that “unfair and illegal trade practices” by steel importers had led to “the idling of Granite City Works and layoffs at Alton Steel.”


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Chuck Raasch is a reporter for the St. Louis Post-Dispatch.

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