As Montana’s farmers, ranchers and metal goods manufacturers suffer significant financial damages due to the effects of President Donald Trump’s tariffs, U.S. Sen. Steve Daines said Thursday that while he “wouldn’t paint a rosy picture in the short-term," he believes America will prevail in the trade wars.
And, the Montana Republican added, agricultural producers and the entire economy will ultimately benefit greatly, especially for future generations.
“The bottom line is this,” Daines said. “We will prevail in these trade negotiations when we’re in a position of strength, not weakness. That’s true of any negotiation.”
Daines said he believes the U.S. is negotiating with the upper hand. But right now, grain growers all across the state are losing money due to the trade war. Daines said he understands it's "short-term turbulence," but expects the process to pay off in the long run in the form of a free and fair trade deal.
Montana farmers grow $1 billion worth of wheat every year, and roughly 75 percent of it is exported, with China the No. 6 customer. Because President Trump implemented tariffs on imported steel, aluminum and other goods in the past year, China and other countries retaliated by instituting tariffs in American goods, including wheat.
That means China is turning to other countries like Australia and Canada to buy wheat and Montana farmers are getting less return on their investment.
Lyle Benjamin, the vice president of the Montana Grain Growers Association and a farmer in Sunburst, said the price wheat growers are getting per bushel is down from $6.50 in June to about $5.50 now.
"It's hitting the market real hard," he said. "That's about a 20 percent reduction in our harvest price this year. It's huge."
Benjamin said the trade war has wiped out the profits for the typical farmer in Montana this year, and the cuts are even worse than last year’s devastating drought in eastern Montana.
The tariffs have also raised materials prices for businesses that use aluminum and steel, like metal roofing company Glacier Steel in Columbia Falls and aluminum-trailer manufacturing company Alcom in Bonner, even if they already use mostly American-made metal.
Daines lauded Wednesday’s announcement that European Commission chief Jean-Claude Juncker had reached an agreement with President Trump to buy more American liquefied natural gas and soybeans in exchange for Trump dropping his threat to impose tariffs on imported European automobiles.
“The E.U., with virtually 24 hours notice, flew to the White House and had a meeting yesterday and the concessions made by the E.U. were far greater than we were anticipating,” Daines said. Trump’s threat to impose tariffs on automobiles "kind of woke them up and brought them to the table and got some concessions. What we saw from the E.U. yesterday was a step forward, and I think you will see additional good news from Mexico soon.”
Daines said China is feeling the heat from the tariffs.
“The Chinese stock market is down 18 percent,” he said. “China is in a bear market. We have the strongest economy. The (gross domestic product) number we’re going to see (on Friday) will be very encouraging. We’re in a position of strength to negotiate trade deals.”
Daines said his ultimate goal is for a long-term, “free and fair” trade deal.
“I’m standing up for Montana farmers and ranchers,” he said. “This is a great opportunity before us to open up new markets for ag and new markets for energy.”
The Trump administration announced this week that it is planning a $12 billion aid package for U.S. agricultural producers to offset the damages from the trade war, but most reports have indicated much of the money will be going to soybean and pork producers in the Midwest.
Daines said he’s unclear if the aid package will offset the losses seen by Montana’s farmers this year.
“It’s hard to say at the moment,” he explained. “If you look at beef, wheat, barley and pulse crops, and I’ve reached out to all those groups, the initial concerns are soybeans and pork, of which we don’t have as much exposure.
"The aid package is a short-term Band-Aid. It’s not the answer, but it will get us to the answer which is fair and free trade agreements and reciprocity with huge emerging markets like China, which will be the most important markets for future generations of Montana farmers and ranchers.”
You have free articles remaining.
On Thursday, U.S. Sen. Jon Tester sent a critical letter to White House trade advisor Peter Navarro, who recently said on MSNBC that the financial impacts of the trade war with China is a “rounding error” compared with either country's economic output.
“Producers across my state consistently tell me that the uncertainty from these trade policies is absolutely hurting their pocketbooks and keeping them up at night,” Tester, a Democrat from Big Sandy, said in the letter to Navarro. “Farmers and ranchers are used to dealing with uncertainty every day; they don’t need the government making it worse.
"I strongly urge you to leave the swamp of Washington to meet in person with agriculture producers who raise and grow and process the food that feeds our nation so you can understand why your ‘rounding error’ comments are so out-of-touch.”
Tester, a farmer himself, was also critical of the $12 billion aid package.
“Farmers and ranchers want to raise their products and sell them to their customers — both here at home and in markets across the world,” Tester said. “They don’t want to collect cash payments from the government. That is not why they got into this business. These dollars are being used as a Band-Aid to clog the bleeding that is felt by American farmers and ranchers as a direct result of Washington’s trade policies.”
Daines was confident that another aid package will not be needed next year.
“I don’t think we’re going to need another aid program here because we’re going to get these trade agreements done before another one is needed,” he said.
He added that he agrees with Trump’s economic advisor, Larry Kudlow, that the trade deals will be wrapped up sooner rather than later.
“I don’t see us needing another aid package down the road,” Daines said.
Michelle Jones, the president of the Montana Grain Growers Association, said her main concern is losing China as a long-term customer, which would be devastating for the industry. Even if the aid package offsets the short-term losses, Chinese buyers are in the process of finding new, long-term suppliers, she said.
Montana lost China as a major customer for malting barley in the 1970s and that market never returned. Jones and Benjamin don’t want a repeat of that for wheat.
“The bigger concern in terms of export markets is maintaining long-term demand,” Jones said. “We are export dependent, and those are markets we want to develop, not harm. China is the No. 1 consumer of wheat and the No. 1 producer of wheat, but they need our high-quality wheat, our hard red spring wheat, to make the products they want and we don’t want to give that up. They’ll go to Australia and Canada, which are two countries that can match our quality.”
Jones also said the tariffs on aluminum and steel have raised the price of things farmers need, like grain bins and cattle guards.
“There’s certainly a lot of concern,” she said. “There’s a lot of eagerness to hold China accountable. China has terrible trade practices. But how long this process takes is a concern. Things need to be addressed but there is some concern about harming our valuable export market.”
Jones said the aid package is a good gesture, but she’s more focused on the long game.
“We’re certainly appreciative that the administration recognizes that there’s been harm to the ag economy but we also want to underscore that (the aid package) is short-term,” she said. “We need long-term solutions of ending the trade war and finding a new trade deal and re-entering the Trans-Pacific Partnership.”
Daines also said that China has been behaving unfairly towards the U.S.
“The Trump Administration has made this clear, the importance long-term of the China market, and I completely understand that,” Daines said. “But right now there are barriers locking Montana farmers out from China and the E.U. and the world. We want to see a quick resolution."
Daines said the prior administration "let China off the hook" because they were stealing commercial and military technology and not behaving according to World Trade Organization practices.
"Consequently, there is short-term turbulence going on right now but it’s the only way to get to a long-term trade agreement, a long-term free and fair trade deal," Daines said.