The growing trade war with China is politics that’s all mixed up. Forget left or right, red or blue, Democrat versus Republican. This issue divides many Republicans from President Donald J. Trump. While many Democrats think this battle overdue. And some of the president’s most strident supporters from coal companies to farmers are not happy with his policy choices.
But make no mistake: The outcome (when it finally occurs) is a dollar-and-cents issue that will impact the daily lives of Native people, tribal governments, and businesses. Wall Street’s jitters are a good indication of that. The market has dropped by nine percent since January, shrinking retirement accounts, tribal investments, and personal wealth.
The story so far. In January, the White House said it would levy a tariff, or a tax, on the importation of solar panels from other countries. Then, a month ago, the White House announced a 25 percent tax on steel and 10 percent tax on aluminum. But the White House scaled back the countries involved, focusing mostly on China.
China responded with trade sanctions on some $20 billion worth of meat, wine, fruit, nuts. Then the U.S. responded again. And China countered. So the list of taxed imported items is growing. The actual tariffs won’t start for a couple of months and the administration is thinking is there will be a deal before then.
Agriculture is already losing in this trade war. This week the market dropped for soybeans, corn, and wheat because if China buys less, there will be more of those same products available for sale and prices will drop. Supply and demand. So those same market forces will make products like Spam cheaper, too.
“Soy growers are frustrated, but not surprised this week, as a trade war looms with U.S. soy’s top customer,” the American Soybean Association said on its website. “The Chinese Commerce Department announced plans to impose a 25 percent tariff on U.S. soybeans in retaliation for the U.S. proposed $60 billion in tariffs against Chinese goods. Soybean futures were already down nearly 40 cents a bushel the morning after this announcement.” The association has a Twitter campaign, #RethinkTheTariffs to stir public support.
The U.S. government and #farmers have partnered for decades and spent millions of dollars to establish foreign markets for U.S. #soybeans. These tariffs put years of work to expand markets, and our livelihoods, in jeopardy. @POTUS #RethinkTheTariffs #SupportSoybeans pic.twitter.com/cxH1VTq9XD
— American Soybean (@ASA_Soybeans) March 23, 2018
Other farm groups make a similar case. The Republican Party has long argued for free trade, benefitting farm states by opening new markets around the world. This is where the politics get mixed up. Many Republicans in Congress are critical of the administration’s trade policy for this very reason. Senate Majority Leader Mitch McConnell, R-Kentucky, said in The Louisville Courier Journal that Kentucky is “a great exporter” and that he is “nervous about getting into trade wars.”
Rep. Tom Cole, R-Oklahoma, wrote last month, “In general, free trade contributes to our national prosperity as well. However, having open markets is not an invitation for others to take advantage of us.” Cole, Chickasaw, called tariffs bad news for his state. “In addition to a rise in prices for farm production equipment like tractors, mills, processors, trucks and more, other trade partners may retaliate with their own tariffs. Consequently, the rise in production costs will have an impact on produce and canned goods. That impact will be felt by American families who will have to pay the price of costlier goods.”
Cole told CNBC Friday that “outside of agricultural areas” the trade issue is a net plus because “somebody is finally doing something about China, which has simply ripped us off since we let them in” the World Trade Organization.
The conservative think tank, the Competitive Enterprise Institute, is less nuanced. It raised concerns “that a shift from free-market policies to more protectionist policies will erase any and all gains this administration has made on the economic front.”
Some Democrats say the president has a point. There has been a decades long decline in manufacturing (and middle-class jobs) because of lower prices from global trade. Sen. Elizabeth Warren, D-Mass., who just returned from a trip to China, says she is not afraid of tariffs and that they should be a part of trade policy.
A good example of at least limited progressive support for Trump’s actions comes from The Nation magazine. “The classic economic case for free trade holds that, while there would be winners and losers, the benefits were so great that the winners can compensate the losers. But the deals are about political power, not economic theory. Corporate globalization has empowered the few, and it has largely scorned the losers,” writes. Robert L. Borosage. “Trump’s decision to take on China is long overdue … Not surprisingly, however, Trump and his team have thus far provided more theater than substance, and are executing this trade war with an extremely haphazard approach—overall, they are simply clueless about the core elements of a sensible globalization strategy.”
A potential trade war also has huge implications for global warming. The Trump administration, of course, has attacked virtually every climate policy from the past administration. And, the first action in this trade dispute involved solar panels. But if the trade war could upend extractive industries, especially coal.
China has not yet levied a tariff on coal, but it’s widely expected because of the industry’s ties to President Trump. China is the world’s largest importer of coal. Wall Street analysts estimated that Chinese coal imports were 4.03 million tons for the first seven months of 2014, exceeding the full year imports for both 2016 and 2015.
Tribes that produce coal, such as the Crow Nation in Montana, have looked toward China and Asian markets as a way to make coal great again. But other tribes along the shipping route, such as the Lummi Nation in Washington, see dirty coal trains as a threat to salmon and their treaty rights.
A short documentary on the Lummi campaign to stop coal terminals is “Not For Any Price.”
A week ago, Bill Chapman, the chief executive officer of the proposed Millennium coal terminal, was still making the case for coal exports. In an op-ed for Crosscut he wrote, “It may seem counterintuitive, but building the proposed coal-exporting shipping terminal, Millennium Bulk Terminals-Longview facility, can reduce global greenhouse gases by making U.S. coal readily available to Asia.” But that terminal has not received permits and a revised applicatiation would require several regional governments, including tribes, to rethink their stands. And this trade dispute would have to go away for banks to finance this enterprise.
But there is a connection between global trade and global warming. A report by United Nations says this issue presents an “important policy conundrum: behind every trade transaction there is a production process and, in turn, associated greenhouse gas emissions. Policies that modify trade (trade policies) can influence emissions, while policies for reducing emissions (climate change policies) can also influence trade.”
Thus, a slowdown in trade stemming from a trade war could reduce carbon emissions. Think of many, many planes, trains and trucks that are no longer packed with goods for delivery around the world. At the very least, a trade war could give global governments time to rethink trade policies in the context of climate change. Then again higher tariffs also impact solar panels, steel for wind mills, and other ingredients used to create alternative energy.
Another question might be: Can trade even be reimagined? A decade ago most global trade was when consumers bought something, say, a radio, or a car. Now the entire chain of supply is global. So a product made in America, such as an airplane, has parts from China, Vietnam, Mexico, Canada, as well as the United States. It’s the same for cars, televisions, and washing machines.
“What all this means is that tariffs are a very poor instrument for punishing China for any unfair trading practices,” writes David Dollar and Zhi Wang for the Brookings Institution. “Some of the cost will be borne by American consumers; some by American firms that either produce in China or use intermediate products from China; some by firms in countries (mostly U.S. allies) that supply China; and some by Chinese firms (mostly private ones).”
Mark Trahant is editor of Indian Country Today. He is a member of the Shoshone-Bannock Tribes. Follow him on Twitter Follow @TrahantReports