Trump's tariffs sow worries among Iowa farmers, manufacturers

Eastern Iowa farmer Dave Walton isn't happy about being a pawn in the growing trade war between the United States and China.

But he's also not ready to dump his support for President Donald Trump, who Thursday proposed another $100 billion in trade sanctions on Chinese goods.

That's on top of $50 billion in tariffs on flat screen TVs, steel, aluminum and more than 1,000 other products.

"I don't think we can say he's hurt us yet. But the clock is ticking," said Walton, a Trump supporter who raises corn, soybeans and cattle near Wilton.

"They've got about two months to negotiate a better agreement between the two countries," Walton said. "If those sanctions go into place, that changes the game.

"I'll have to revisit my support," said the fourth-generation farmer.

'China is clearly putting politics over economics'

Trump's said the latest tariffs are in response to China's retaliation against "American farmers and manufacturers."

On Wednesday, China responded to U.S. sanctions with duties on $50 billion of U.S. products, including soybeans, beef, corn and pork, all products that are important to Iowa's economy.

The 25 percent tariff on pork has already been put in place, costing Iowa, the nation's top pork producers, $400 million from declining prices, said Dermot Hayes, an Iowa State University agricultural economist.

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If China responds with $100 billion in new tariffs, it will cover most all U.S. products, Hayes said.

The U.S. exported about $130 billion in goods to China last year, while importing nearly $506 billion in Chinese goods, leaving the U.S. with a $375 billion deficit.

Hayes said China is targeting Trump supporters with its farm sanctions, especially tariffs on soybeans.

"China is clearly putting politics over economics," Hayes said, adding that the country needs U.S. soybeans.

China imports about 60 percent of the world's soybeans, last year buying $14 billion worth from U.S. growers.

Iowa growers estimate that every third row of beans planted in the state is exported to China. Iowa ranked second nationally in soybean production last year.

"I'm not thrilled about us being used as a pawn," Walton said, who blames both the U.S. and China for putting agriculture in the middle of the trade dispute.

"It never turns out well for countries that use food as a negotiating tactic," he said.

'A cold bucket of water'

Trump directed U.S. Agriculture Secretary Sonny Perdue on Thursday to "use his broad authority to implement a plan to protect American farmers and agriculture."

No details were available Friday on Perdue's plans.

The tariffs are rippling into Iowa manufacturing as well.

The state is home to large ag equipment manufacturers that include Deere, Kinze and Vermeer, and seed giant Pioneer, a unit of DowDuPont's Corteva Agriscience.

Deere and DowDuPont leaders have said they're concerned the proposed tariffs would hurt profits, which are tied to the economic health of farmers.

U.S. farm income has plummeted about 50 percent since 2013, driven down primarily by falling corn and soybean prices.

The threat of the U.S. tariffs on steel and aluminum are pushing those prices higher.

That's prompted David Zrostlik, president of Stellar Industries, the maker of large service trucks in Garner, to warn his dealers that prices could climb, given rising production costs.

Zrostlik, a Trump supporter two years ago, said he likes the president's moves, cutting taxes and re-evaluating regulations.

The tariffs, though, "are a cold bucket of water," he said.

"There are a better ways to get things negotiated than putting all American industry and agriculture in peril," said Zrostlik, chairman of the Iowa Association of Business and Industry board.

'It's how Trump works'

Tim Hagle, a University of Iowa political scientist, said he thinks many Iowans will "wait and see" how Trump's trade negotiations play out.

The New York billionaire developer received 51 percent of the Iowa vote in 2016, winning in 93 of 99 counties.

But support has wavered. In February, 44 percent of Iowans approved of his job performance, inching up from 35 percent in December, a Des Moines Register/Mediacom Iowa Poll showed.

Hagle said many supporters see the escalating trade threats as part of Trump's negotiating tactics.

"It's how Trump works," he said. "He says some things that get people upset, but it's basically tough talk initially, and then he comes back from that."

Hagle said "we saw that with NAFTA," where the president talked about ending the North America Free Trade Agreement with Canada and Mexico.

"The negotiations are ongoing, and he's softened his language somewhat there," he said.

Walton said he voted for Trump to shake things up.

"The trade deficit with China needed to be addressed," he said.

"I expected him to follow through" on his campaign pledges, he said. "That's not a surprise. The surprise for me was how quickly it escalated."