Farmer Patience on Tariffs Comes with Caution Flag

China & US at odds in trade. WIll there be a ceasefire between the two largest economies? ( MGN )

WASHINGTON (AP) — Iowa hog farmer Howard Hill is feeling the pinch from President Donald Trump's get-tough trade policies — his pigs are selling for less than it costs to raise them. It's a hit that Hill is willing to take for now, but his understanding also comes with a caution flag for the president.

"We have patience, but we don't have unlimited patience," says Hill, who raises about 7,000 hogs a year near the central Iowa town of Cambridge.

The president's willingness to pick trade fights with multiple trading partners at once has set off volleys of retaliatory tariffs, driving down the price of pork, corn and soybeans in political bellwether Iowa and elsewhere, and contributing to a 12 percent drop in net farm income nationally last year.

At issue are trade talks with China over intellectual property theft and a new U.S. deal with Canada and Mexico to replace NAFTA that is awaiting congressional approval. Those efforts could take months to complete. So scores of farm and business groups are pressing for quicker relief, a stopgap step to help them out until the more comprehensive trade agreements are resolved. They're urging the administration to remove Canada and Mexico from the list of nations hit with a 25 percent tariff on steel shipped to the U.S. and a 10 percent tariff placed on aluminum. Their hope is that action would give the U.S. neighbors cause to remove retaliatory tariffs they placed on U.S. goods, such as a 20 percent levy Mexico placed on U.S.-produced hams.

So far, the administration hasn't bit on that idea, but it dispatched Secretary of State Mike Pompeo to Iowa this week to assure farmers that help is on the way.

For now, Trump is walking a political tightrope: Going to bat for steel and aluminum makers has endeared him to many voters in Ohio and Pennsylvania, where steel production is a matter of economic pride and legacy, but it could end up hurting him in ag-heavy states like Iowa and Wisconsin that backed him in 2016.

In Iowa, which casts the first votes of the presidential campaign season, state Republican Party Chairman Jeff Kauffmann said he's surprised by how patient farmers have been with Trump. The Trump Agriculture Department did approve up to $12 billion in assistance to help compensate farmers caught up in the tariff battle.

"They all say it's hurting," Kauffman said of the trade disputes. "They're all saying the stopgap relief was definitely not a cure-all, but they all understand what the president is trying to accomplish. It's quite an interesting phenomenon."

But the defeat of two Republican House lawmakers in last year's midterm elections hints at some of the anxiety in farm country.

State Democratic Party Chairman Troy Price said the political climate in the state has changed since Trump defeated Democrat Hillary Clinton by 9 percentage points in 2016, in part because of trade.

"These tariffs are kind of a slow burn. People are getting more and more frustrated," Price said. "It's one of the reasons Donald Trump is going to lose Iowa in 2020."

Some of the Democratic candidates for president are starting to differentiate themselves from Trump on trade when talking to Iowa voters. Sen. Kamala Harris of California has criticized the president's "go it alone" attitude. Former Rep. John Delaney of Maryland says "we're not going to succeed in the global economy by enacting protectionist policies."

Still, some Democrats could have trouble seizing on the issue. Sen. Bernie Sanders of Vermont spent much of the 2016 campaign railing against the very trade deals that Trump denigrated, calling them "disastrous" for blue-collar workers.

Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, is among the lawmakers urging the Trump administration to lift the steel and aluminum tariffs on products brought in from Canada and Mexico. He said it's a first step to getting the United States-Mexico-Canada Agreement through Congress. He also said it would improve the financial picture for farmers.

"Unfortunately we're starting to see more and more warning signs that farmers are running out of leeway with their bankers and landlords," Grassley said.

Pompeo sought to calm some of those nerves Monday even as he warned that Chinese theft of technology affects agriculture, too.

"The good news is this — help is on the way," Pompeo said. "American producers and Chinese consumers will both be better off. The outcome of President Trump's trade negotiations currently under way will pay dividends for people in each of our two countries."

Hill said he was encouraged by Pompeo's remarks.

"I think people recognize, particularly with China, they have not been playing by the rules for a long time," Hill said. "I think producers are supportive of trying to correct these issues. On the other hand, we don't want it to go on forever."

The American Farm Bureau Federation reports that Chapter 12 farm bankruptcies in the U.S. went down in 2018 compared with prior-year levels. But it also noted that farm debt is at a record high, and that lending standards are tighter and the cost of credit is rising.

"Certainly many farmers have liquidated assets to discharge debt. How much longer can many others endure remains a question," the farm group said.

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