Trump Got Rolled

By ART CULLEN

Soybean traders drew what irrational exuberance they could from word that China and the United States decided Sunday, Dec. 2, not to escalate their trade war. Beans closed up 11 cents per bushel, or 1.21%, higher, following a highly hyped meeting between President Trump and Chinese President Xi Jin Ping. Their only announcement was that the US would not impose even more sanctions on China in January as planned, and that in return China will buy more US agricultural products of undetermined size and value at an unnamed time. Left unsaid from the lovefest at the G20 meeting in Argentina: What happens to the tariffs in place during the 90-day cease-fire period, the tariffs Trump imposed that crushed soy, corn and pork markets?

They’re still discussing that, apparently.

Corn was up 4 cents to $3.50 in Newell at Monday’s close, and beans were $8.16 locally — $9.05 in Chicago futures, a basis spread that indicates uncertainty about where the market is headed. Beans were up Monday by 20 cents in morning trading but lost all that luster by afternoon, leaving the bins still full.

Meanwhile, Argentina is buying up cheap US soy stocks since they sold all their soy to China. Brazil is now the supplier of choice, and those switches will have lasting consequences. And, Canada is buying US beans, marking them up and reselling them to China.

China will get all the soy it needs at the price it wants. See how prices have been driven down so far that China now says it might buy our products, unless the Argentines throw in a box of chocolates? What a great deal Donald Trump just swung for us. Remember that he borrowed $500 million from the Chinese for a hotel project. Iowa State University scientists supervise seed genetics labs for US firms in China. But when China wants to knock off 20% from the US soy market it gets our own president to do it. Who is kidding whom?

We had hoped that by appointing Xi’s longtime friend, former Iowa Gov. Terry Branstad, as ambassador to China, Trump’s bluster about China was just that. As it turns out, it was used against the United States, our standing in world agricultural markets is diminished, Iowa is worse off, and Sino-American relations seldom have been at a lower point.

If the boys in the Chicago pits thought that Trump would get anywhere with China, beans would have been up the limit for two days straight. Instead, they had a run that lasted a few hours. That’s because the markets understand that Trump is all hat and no cattle, and no trade deal is in sight.

TRUMP SENT TO Congress a new North American Free Trade Agreement that he calls something else. It is the same thing with a new name USMCFTA, or something like that. Agriculture got no better deal. Amana will not be moving back to Iowa from Mexico, and neither will Maytag. Tyson will sell no more pork into Mexico. It did not prevent GM from closing five more auto plants while the majors continue to shift production to maquiladora plants south of the border where labor rules are non-existent.

The Bloviator in Chief insists that Congress can make no changes to the proposed agreement, since he believes he has become King. He wants it delivered back to his desk for a signature by the end of the year, or else. Why bother with Congress if it can make no changes? Democrats and Republicans in the Senate are not so eager just to rubber-stamp. They want side agreements governing labor and environmental standards. They want to make sure that Trump isn’t giving away they farm like he is to the Chinese. The president has proven he cannot be trusted. Congress should take as long as it needs to, to make certain that we don’t do a worse job of hollowing out manufacturing in the Upper Midwest, before signing a new agreement with Canada and Mexico.

TRUMP HAS MADE the Midwest, and Iowa in particular, the whipping boy for his bully-boy foreign policy. He alienated every one of Iowa’s biggest trading partners — Mexico, Canada and China — which is causing real hardship on the farm and making things even leaner on the packinghouse floor. We don’t know why he started these trade wars because he hasn’t delivered anything as a result. The main benefit to ag in the new deal with Canada and Mexico is something helping US dairy producers over dried skim milk. Seriously. The trade wars have not left us in a better position, but actually made us more vulnerable and give us less leverage with trading partners. It appears that Trump did this for the benefit of China to which he is deeply in debt, for his friends in the shrinking US steel industry, and to whip up resentment among his base. His trade policies will do absolutely nothing to improve world markets for Iowa ag products, from corn to pork. In fact, we have gone backwards with little progress in sight for expanding markets.

Art Cullen, managing editor of The Progressive Populist, won the 2017 Pulitzer Prize for editorial writing in his day job as editor of The Storm Lake (Iowa) Times. His book, Storm Lake: A Chronicle of Change, Resilience, and Hope from a Heartland Newspaper, was published by Viking Press in October.

From The Progressive Populist, January 1-15, 2019

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