Blog: Dean BestMaybe Trump is finding trade wars aren’t so easy to win

Dean Best | 25 July 2018

In March, a day after issuing stiff tariffs on imports of steel and aluminium, Donald Trump took to Twitter to give his verdict on trade disputes.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100bn with a certain country and they get cute, don’t trade any more – we win big. It’s easy!” the US President exclaimed.

Four months later, with the trade tensions between the US and a number of major markets starting to bite, Trump has has to intervene to prop up farmers caught in the cross-hairs.

Yesterday (24 July), the Trump administration announced plans for assistance for US farmers – hit by retaliatory measures from markets including X, Y and China – worth some US$12bn. The US government plans to make direct payments to farmers but also buy stocks to try to protect prices affected by the tit-for-tat tariffs.

"This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire US economy,” US Secretary of Agriculture Sonny Perdue said.

“The President promised to have the back of every American farmer and rancher, and he knows the importance of keeping our rural economy strong.

"Unfortunately, America’s hard-working agricultural producers have been treated unfairly by China’s illegal trading practices and have taken a disproportionate hit when it comes illegal retaliatory tariffs. USDA will not stand by while our hard-working agricultural producers bear the brunt of unfriendly tariffs enacted by foreign nations."

US farming organisations praised the move but also talked up their desire to trade.

"US pork, which began the year in expansion mode to capitalize on unprecedented global demand, now faces punitive tariffs on 40 percent of its exports. The restrictions we face in critical markets such as Mexico and China – our top two export markets by volume last year – have placed American pig farmers and their families in dire financial straits. We thank the president for taking immediate action," Jim Heimerl, president of The National Pork Producers Council, said.

"While we recognise the complexities of resetting US trade policy, we hope that US pork will soon regain the chance to compete on a level playing field in markets around the globe. We have established valuable international trading relationships that have helped offset the US trade deficit and fueled America’s rural economy.”

US milk producers welcomed the announcement but also underlined their desire to see the Trump administration look to strike deals on trade, citing the need for agreement on the at times fraught talks to renegotiate NAFTA.

“Today’s announcement reflects requests that our organisation has made of USDA to relieve some of the financial pain dairy farmers are feeling due to lost export opportunities,” Jim Mulhern, president and CEO of The National Milk Producers Federation, said.

However, Mulhern said a pursuit of new trade opportunities by the US “is the long-term solution to the current situation. We need this assistance for now, but we also need new trade deals that allow our farmers to reach customers in other nations”.



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