Trade Offs

For the better part of two years agriculture has been caught in a tug of war over trade. For every step forward there seems to be at least one if not two back. After all this time we still don’t have a successful resolution to USMCA or a deal with China. Supposedly we are close on both and hopefully we are but we’ve heard that so many times it’s hard to get too excited. History has shown that no one really wins a trade war especially ag producers. At the beginning of the trade war with China, President Trump said short term pain would result in long term gain. Well the pain is lasting a lot longer than many thought and the gains are still in question even as the government tries to compensate with direct payments. When it comes to China, USMCA and Japan are we getting trade deals or trade offs? Fortunately we got a deal done with Japan but it’s fair to ask if it is much better than we would have had if we stayed in TPP. Congress, primarily the House, continues to debate USMCA. Hopefully it passes soon and seems to include some improvements for agriculture but considering the tariff battles and retaliation, it seems like a big price to pay just to, for the most part, keep what we already had. The biggest trade question is China. The effects of the Russian grain embargo are still being felt half a century later. It encouraged competitors to increase production and forced a major customer to look elsewhere for grain. Is history repeating itself? We’ve heard that when the deal is done China will buy even more than before. That sounds good but it’s hard to believe China will become that dependent on one supplier when they have already increasingly turned to other suppliers during the current stand off with the U.S. No doubt China will continue to buy from us but will it really be more than before? Right now getting back to where we were would be an accomplishment. It will be years before we know if all this was worth it. I hope these trade deals are reached soon and that they will be as good as promised but before there is any long term gain it will take quite awhile to pay for that so called “short term” pain. Sadly, even if it comes it won’t be in time for some.