Kim Reynolds, GOP leaders worried about escalating trade war, say it threatens fragile ag economy

Donnelle Eller , Brianne Pfannenstiel | The Des Moines Register

Iowa Republican leaders voiced concern Tuesday about a trade war after President Donald Trump upped the trade ante with China, threatening to slap tariffs on another $200 billion of products.

"We know what happens when tariffs are increased ... and there's retaliation. It hurts agriculture. It's going to hurt Iowa tremendously," U.S. Sen. Chuck Grassley said during a weekly call with reporters.

The new Trump tariffs, announced Monday, come days after the U.S. and China each said they'd level tariffs on $50 billion of goods.

The 25 percent tariffs, slated to go into effect July 6, capture hundreds of U.S. goods, including soybean exports.

They could cost Iowa farmers about $624 million, given reduced demand and prices, an Iowa State University economist estimates.

And new Chinese tariffs already in place on pork could cost Iowa producers $360 million.

Iowa Gov. Kim Reynolds said Tuesday the tariffs threaten a "fragile ag economy."

"Our farmers want to work with you, but we need to get something done," the Republican said, noting that the rest of Iowa's economy had started to "grow and boom."

"Agriculture is always the first casualty when we’re talking about trade negotiations. Our farmers are producers, and they just want access to markets," said Reynolds, adding that she would again reach out to the White House and Cabinet members with her concerns.

Sen. Joni Ernst said the "tariffs are nothing more than a tax on Iowa farm families."

“With China vowing to retaliate, farmers, ranchers and rural communities stand to lose the most. And, while I recognize and support President Trump’s desire to hold China accountable — this should not be done at the expense of rural America," Ersnt said in a statement.

Grassley said farmers likely will have to absorb the pain from the trade dispute.

But that doesn't mean he's happy with the escalating tariffs.

"Don't interpret that to mean that I'm satisfied with this process," Grassley said. "I'm expressing the political reality of a president that's determined as he is to move ahead."

"We're trying to impress on the president that this is a nervous situation for farmers," Grassley said. "It will affect farmers negatively if his plan doesn't work.

"If it does work, then we're probably going to be better off, the economy as a whole, maybe agriculture as a whole," he said.

Grassley said he plans to find out how likely it is the trade dispute with China can get worked out before the July deadline.

The Senate finance committee is meeting Wednesday with Commerce Secretary Wilbur Ross. "I think he'll come to the conclusion that not very many senators, at least Republicans, agree with what he's trying to do there," Grassley said.

U.S. Rep. Dave Loebsack, a Democrat, said he's disappointed the president has "imposed generalized, across the board, tariffs rather than a more nuanced approach that holds bad actors like China accountable and ensures that Iowa’s agricultural economy is not harmed."

Loebsack said he would consider "legislative action that would protect Iowa farmers from the president’s unpredictable trade behavior.”

Sen. Bob Corker, a Tennessee Republican, has proposed a bill that would curb the president's authority on tariffs, but leaders have said they won't bring it up.

Grassley noted that Trump has asked U.S. Secretary Sonny Perdue to "help those people who will be harmed."

"Perdue says he can do that, but it's unclear how that can be done," Grassley said.

"That's not what farmers in Iowa want — help from the federal Treasury," he said, noting farmers want fair trade, not federal aid.

Perdue said last week the Commodity Credit Corp., USDA agency that has broad authority to support farm prices and incomes, is among "the tools available" but provided no details.

"Most Americans acknowledge there are problems with the current trade situation," Grassley said, pointing to a U.S. trade deficit of $807 billion last year.

But "there are American businesses and workers who are hurt by these by these trade (actions) as products they import will rise in price, while products they export will see price drops," he said.

"You hope he (the president) has a smart strategy, but right now, I can't say that," Grassley said.