America’s Commerce Secretary Wilbur Ross (once called the King of Bankruptcy for his incredible negotiating and turn-around stories) has just left the bargaining table in China empty-handed.
As the Trump administration switches from trade war, to trade dispute, to trade discussion – China has just whacked us on the head by warning that any implementation of trade sanctions (including tariffs) would void all the potential positives that were associated from the recent US-China trade talks. Well folks, Implementation Day is right around the corner (6/15) – and it’s anyone’s guess as to what will happen.
Uncertainty regarding international trade remains perplexing for the business community, especially for those of us in the apparel and footwear trade. In fact, our empathy reaches everyone who has something to sell.
For example, the 2.1 million farms in the U.S. – 97 percent of which are family-owned as of 2015 according to the USDA – are greatly affected by this uncertainty.
Perhaps our farmers were excited about the creation of the Trans-Pacific Partnership and upped the ante on what they could grow. As soon as President Donald Trump took office, he abruptly canceled that idea. Concept shattered (corn and cotton wilting on the stalk).
Perhaps our farmers export cotton, vegetables, or wheat though NAFTA – that program is running on thin ice, with delays in negotiating a new agreement, and constant threats of cancellation or retaliation.
Perhaps our farmers export cotton or sorghum to China – that is caught up in a potential trade war (dispute/discussion).
Perhaps our farmers export soybeans to the European Union, beef to Canada, or corn to Mexico – these trading partners now plan to add a tariff on American products in retaliation for the steel and aluminum tariffs we have presented.
Because they live the dream and walk the walk, our farmers have the potential to be hit the hardest by factors that they can’t control.
The fact is that 65 percent of the cotton we grow in America was for export from 2010 to 2012, according to the National Cotton Council. Cotton is often sent to far corners of the world, to be turned into clothing that is sent back to our shores.
It is also a fact that farmers export more product to the world than America imports – thus, exports are critically important to them. We can “rail on” about technology transfers, or threats to our national security, or preventative tariffs, but truth be told, if we were all farmers, our questions would be less complex. We would want to know how many acres of cotton to plant, or how many hogs to own.
Our farmer’s goal is to interpret what the administration says about our trade future, as it certainly takes time to grow the right product and to raise proper livestock that can be sold. Mistakes in trade policy are very costly in the farming industry, and to all of us in the business world.
The great humorist Will Rogers said that “politics is applesauce” and, when he said it, he probably was connecting directly to America’s agriculture community. Will Rogers also said: “I don’t make jokes, I just watch the government and report the facts.”
Clearly, Mr. Rogers was ahead of his time.
Watching China develop a trade policy is very programmed. They have a five-year plan that they rigorously follow.
Watching the Trump administration develop a trade strategy is like watching someone build the Hindenburg. What’s the plan? Don’t keep telling us that you are breaking new ground, when we have no idea what ground you are breaking.
Where is America’s five-year plan? Where is our five-minute plan? Could the end-result be as tragic as the Hindenburg?
Congress retains the power to negotiate trade deals, but the Trump administration is forging ahead without the help of Congress, as they re-negotiate existing trade deals and attempt to tariff their way into trade reform.
All the paths that the administration is utilizing to rip up trade deals, or to function under sanctions – 201, 232, or 301 – do not require Congress to hold its hand. One could argue that this aggressive approach will yield results, but one could also argue that this pattern of behavior will cause disruption, chaos, and only have a minimal effect, while stoking inflation along the way.
We don’t yet know what this latest crop of talks will yield. Will we have epic success or epic failure?
At the end of the day, our farmers just want to know how much soil to till and how many acres to plant, while those of us in the business community want to know how to sell our products around the world. Trade uncertainty is terrible for us. After all – Canada, China and Mexico are America’s three biggest export markets.
Will Rogers could have been a sage advisor to the Trump administration when he said: “If you ever find yourself in a hole, stop digging.”
Rick Helfenbein is president and CEO of the American Apparel & Footwear Association and is a strong advocate for a robust U.S. trade agenda who lectures frequently about politics and international trade and has appeared on CNN, CNBC, Fox, BBC & Bloomberg.
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