President Donald Trump’s plan to enact a 25% tariff on steel imports and a 10% tariff on aluminum has some concerned about global trade wars that could hurt Arkansas agriculture – the state’s largest industry sector.
But U.S. Rep. Rick Crawford, R-Jonesboro, who also represents the district in which Big River Steel operates, told Talk Business & Politics he doesn’t think Arkansas’ ag sector will be harmed if the proposed tariffs are put into place.
China has been “dumping” cheap steel into world markets, and it’s time for the U.S. to take action, Crawford said. This has had a negative impact on the American steel industry, and his district is the second leading steel producing district in the country, he said.
“It shouldn’t have come as a surprise after the rhetoric that came out of the Trump campaign,” Crawford said.
A trade war with China will not result in long-term damage to the ag sector in Arkansas, the dominant sector in Crawford’s district, he said. Agriculture is Arkansas’ largest economic sector with an annual impact of $16 billion. The markets for soybeans, rice, and cotton – staple crops in Arkansas – have expanded since the implementation of NAFTA, and the agricultural expansion continues to grow each year.
China imports about $14.2 billion worth of U.S. soybeans each year and $550 million in U.S. cotton, another leading ag crop in the state, according to the United States Department of Agriculture. It’s the top agricultural export market in 2016, the USDA reported. Ag export growth has grown to China from $6.7 billion in 2006 to $21.4 billion in 2016.
Arkansas farmers grew 3.5 million acres of soybeans in 2017, and another 438,000 cotton acres. Arkansas exports an estimated $1 billion a year in soybeans and soybean products, according to the Arkansas Farm Bureau.
An ongoing drought in South America will drive down soybean yields this year, and the Chinese will have to buy U.S. soybeans, he said. Soybean use has grown in China and they will have to have them to feed their growing livestock populations.
‘HARDBALL WITH CHINA’
A trade war with China or any other country wouldn’t necessarily be a good thing, Crawford said. But, the U.S. has been involved in bad trade deals around the globe, and it must change, he said.
“I don’t think it’s going to be a problem,” Crawford said of the tariff threat. “China is creating economic strife. … It’s time to play hardball with China.”
Global markets are vital to agriculture producers, and lawmakers need to be mindful of the impacts of trade agreements, Crawford said. The tariff proposals are still just talk at this point, and may not happen, he said.
Nucor Corp. operates facilities in Blytheville and Big River Steel operates a facility in Osceola, both of which are in Mississippi County. Nucor employs an estimated 750 workers, and Big River Steel employs 435. Workers in the plants make on average more than $75,000 per year, far above the median income in the county, one of the most impoverished in the state. Crawford is a co-chairman of the Congressional Steel Caucus.
Crawford doesn’t know if the president will follow through with his threat, but it’s already having an impact, he said.
“I think he’s being responsive to the steel industry. … It’s been a long time coming,” Crawford said.
AGRI INDUSTRY RESPONSES
Arkansas Farm Bureau President Randy Veach doesn’t share Crawford’s optimism that Trump’s tariffs will be harmless.
Veach told Talk Business & Politics the tariffs could have a significant negative impact on the state’s agriculture industry and could also harm the ongoing renegotiation of the North American Free Trade Agreement (NAFTA) with Canada and Mexico could be impacted. The two countries, along with China, are Arkansas’ top trade partners, he said. If tariffs are placed on steel and aluminum then those countries might retaliate by placing tariffs on soybeans, rice, and other ag commodities.
“It has the potential to hurt our farmers and ranchers,” he said.
Veach is in Washington, D.C., this week meeting with lawmakers to discuss the tariffs and other trade issues such as the NAFTA. He is slated to meet with Crawford on Tuesday (March 6). Agriculture is the only sector in the U.S. economy that has a trade surplus, and it will be damaged by any trade war, he said. Up to 40% of Arkansas’ commodity income comes from trade, he said.
John Heisdorffer, president of the American Soybean Association and an Iowa soybean farmer, is also worried about Trump’s tariff plan.
“The tariffs announced today by the administration will put the interests of other domestic industries over farmers,” Heisdorffer said in a statement when Trump first announced his plan. “Prior to today’s announcement, China has indicated that it may retaliate against U.S. soybean imports, which would be devastating to U.S. soy growers. Our competitors in Brazil and Argentina are all too happy to pick up supplying the Chinese market.”
‘HOPING FOR THE BEST’
Arkansas Agriculture Secretary Wes Ward told Talk Business & Politics his department hasn’t decided on an official position about the tariffs. Any action that could lead to less international markets for farmers would be detrimental to the state, but Ward said he thinks the president is attempting to negotiate better trade deals.
China is a key trade partner, and the department will keep a close eye on its reaction if tariffs become a reality, he said. U.S. Agriculture Secretary Sonny Perdue has been a champion of the ag sector, and Ward said Perdue will let the president know what’s in the best interest of agriculture producing states, he said.
“We’re cautious right now. We’re waiting to see how this will play out. We’re hoping for the best,” Ward said.