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Trump's tariffs: Not good for Iowa (or anyone else)


President Donald Trump said trade wars were "good," expressing defiance amid global criticism of his plan to slap tariffs on steel and aluminum imports.

By John Freivalds

Published March 2nd, 2018

Des Moines Register

trumphand.jpgIowa finds itself smack in the midst of the heated debate over free trade.  And we consumers want Wal-Mart’s mantra — goods at low prices, and so what if they are imported?

Now Trump wants tariffs on steel and aluminum, which means China will retaliate by putting tariffs on Iowa soybeans. And the trade wars have begun.

The Trump administration, for political reasons, has started the tariff wars by levying tariffs on solar panels and washing machines and now steel and aluminum. He threatens more to come.

 Complaints about imports that compete with U.S. industries start with the comment that "we must have a level playing field." Imports need to come from countries that operate under the same circumstances as U.S. firms. This is impossible. The cost of land, incentives, taxation rates, financing packages, interest rates, worker benefits, nearness of suppliers, environmental laws, shipping rates, labor rates, cost of robots, electricity rates and weather patterns are different everywhere.

One Dubuque farmer said that soybean growers need a level playing field with Brazil. Duh?

All the trade issues that are being debated today are old hat, yet the protectionist politicians believe they have discovered something new. In 1776, a guy named Adam Smith wrote "The Wealth of Nations," which called for nations to specialize in those areas that they are good at.

The editor of a summary of Smith's book put it this way: "The idea is that the economic system is automatic and when left with substantial freedom can regulate itself."  This is often referred to as the "invisible hand." The ability to self-regulate and to ensure maximum efficiency is threatened by monopolies, tax preferences, lobbying groups (ed. note:  there are 36,000 lobbyists in DC) and other privileges extended to certain members of the economy at the expense of others. Or to quote my boss in the grain business, who earned an export award for the export of beet pulp, "high prices cure high prices and low prices cure low prices."

However, in 1930, two Congressmen named Hawley and Smoot fell prey to the idea that if we protect American business from foreign business this will pull America out of the Great Depression.  So thought Republican President Hoover.  But since President Trump says he doesn't read but watches cable TV, let us take a look at what the Smoot-Hawley tariffs accomplished a mere 88 years ago.

An Encyclopedia Britannica economist wrote this: "Smoot-Hawley contributed to the early loss of confidence and signaled US isolationism. By raising the average tariff 20 percent it promoted retaliation by foreign governments and many overseas banks began to fail. Within two years some two dozen countries adopted similar "beggar thy neighbor" duties making worse a beleaguered US and world economy." President Franklin Roosevelt abolished most of the tariff in 1934.  And today the consensus view is that the passage of the Smoot-Hawley Tariff Act exacerbated the Great Depression or in Dubuque English "we shot ourselves in the foot."

So here we go again.

John Freivalds of Dubuque is a commodities broker and author. Contact: This email address is being protected from spambots. You need JavaScript enabled to view it.



Here is what the people are saying!!

  • Patty Knopp-
    • You get what you voted for.
      • Bob Vander Beek · Iowa City, Iowa
        • Or what the majority voted against when the Electoral College results in the outcome.
      • Debbie Linthicum
        • It's just a shame that those who were smart enough to not vote for trump are being destroyed with those who did.
      • John Gabriel
        • Tariff are never good as the public pays for them
          • Ben Bailey · Red Pill Dispenser at Pepe's
            • Wrong! When countries like China are intentionally subsidizing industry and manipulating currency to dump products on the United States in order destroy our industrial base tariffs are not only good they are justified.
          • Rick Whitten · Information Technology Specialist at State of Iowa
            • Ben Bailey: I think that China is just paying their steel workers a lot less. Isn't that a Republican thing to do?
          • Ben Bailey ·Red Pill Dispenser at Pepe's
            • Russian Whitten, Paying people what they agreed to be paid, it’s called the free market.

              China is subsidizing steel producers so that they actually produce at a loss in order to dump it into other countries and destroy that country’s industry. Everyone knows China is doing this, it’s not some secret. A type of economic warfare

              For some reason do you American hating anti-worker types cannot stand that Trump is standing up for American workers.
          • Rick Whitten · Information Technology Specialist at State of Iowa
            • A lot of farmers voted for Trump and now a lot of farmers are going to get screwed. But, I'll bet they are really glad that Trump built the wall and deported all the immigrants. That must be real important for the farmers' bottom line.
              • Ben Bailey · Red Pill Dispenser at Pepe's
                • Have you gone from being an always wrong expert on labor to an always wrong expert on trade?
                  At some point you should start to question who you get your information from but that’s assuming you actually want to be correct in that just a preachy demagogue
              • Rick Whitten · Information Technology Specialist at State of Iowa
                • Ben Bailey: The article logically suggested that China would retaliate with import tariffs on soybeans. That would mean fewer soybean exports. Supply and demand. Soybean prices go down. Farmers make less profit. What part of that is wrong?

                  Meanwhile, there is no funding for a wall yet. Deportation rates are not higher. There are more non-criminal aliens being deported, but the overall rate is just about the same. What part of that is incorrect?

                  You saying that I am wrong really doesn't mean a damned thing.
              • Ben Bailey · Red Pill Dispenser at Pepe's
                • Рик Уиттен, try to stay on topic comrade!

                  We run a -$100, billion monthly trade deficit with China. Do you really think they would risk a trade war over there admittedly unfair steel dumping practices? You must be the worst negotiator ever because you fall for obvious empty commie threats.
              • Terry L McInroy · Charles City, Iowa
                • Ben Bailey Rick is right and you are completely and utterly wrong like the inept moron Trump!
              • Ben Bailey · Red Pill Dispenser at Pepe's
                • Terry L McInroy You sound smrat!
              • Ben Bailey · Red Pill Dispenser at Pepe's
                • This is another genius move by Trump the left is too dumb to see( or more likely they just hate America that much). He’s rebuilding our industrial base right before a massive infrastructure bill
                  • Rick Whitten · Information Technology Specialist at State of Iowa
                    • Even if China doesn't retaliate with reduced soybean imports, places like John Deere in Ankeny and Dubuque will have to pay more for steel.

                      As it is, John Deere production slows down every week due to delays getting parts. American steel cannot ramp up production quickly enough to supply more parts in the near term.

                      Trump's tariffs will absolutely result in layoffs at US manufacturing plants that use steel and aluminum. The lost jobs will almost certainly exceed the number of jobs gained by steel workers. I challenge you to find even a conservative economist that says otherwise.
                  • Ben Bailey · Red Pill Dispenser at Pepe's
                    • Ruskie Whitten, I imagine this is hard for you to watch. After 8 years of Obama and with the prospect of Hillary, you were soooooo close to finally seeing your dream of all industry in America destroyed and the majority of Americans dependent on the government for their survival. Then, Trump waltzed in and quickly set the stage for a rebuild of the American industrial base.

                      All your shltty plans were laid to waste so quickly by one man who puts America First!
                  • Terry L McInroy · Charles City, Iowa
                    • You do know even his own economic advisors are against this! Trump making moronic mistakes daily!
                  • Terry L McInroy · Charles City, Iowa
                    • There is NO massive infrastructure bill. The one proposed by Trump builds toll roads so tax payers keep on paying and paying. And the small price tag of $200 billion is's estimated that $4 trillion is needed. But now that we are in debt because of the $1.5 trillion tax break to the wealthy, children and grandchildren will be paying for Trump's moronic tax break. What a complete idiot he is!
                  • Ben Bailey · Red Pill Dispenser at Pepe's
                    • F China... It’s nice having a president who is strong enough to stand up for America.

                      “The report briefly mentions China's most recent escalation, its November requirement that American corporations move their R&D and patents to China:

                      In order to qualify as “indigenous” innovation under the accreditation system, and therefore be entitled to procurement preferences, a product’s intellectual property must originally be registered in China. (p. 69)

                      In short, the United States government is letting the Chinese government practice mercantilism, the strategy of maximizing exports and minimizing imports. We freely receive Chinese imports without requiring reciprocity.

                      It's time to impose a tariff on Chinese goods proportional to our trade deficit with China. Such a tariff, permitted by a special WTO rule for trade-deficit countries, would finally force the Chinese government be take down its many, many barriers to American goods and services.”
                  • Rick Whitten · Information Technology Specialist at State of Iowa
                    • Besides the fact that more expensive steel prices will be passed along to American consumers and that this tariff raises the specter of trade wars, Trump's rash decision introduces instability into the economy.

                      He said he will impose tariffs next week. That's not much warning. Will he actually do it?

                      He said he'd raise the age for gun purchases. Then he said he wouldn't. Then he suggested would be in favor of more gun regulations. Then he wasn't. Now, maybe he is again. No, wait. The whitehouse spokesperson said he isn't.

                      Political turmoil makes the whitehouse and the Republican party look foolish. But, when you mess with tariffs and trade, that costs real jobs in the real economy -- even if it is just the economic engineer-in-chief just thinking out loud.
                      • Ben Bailey · Red Pill Dispenser at Pepe's
                        • So do you think countries with centrally controlled economies should be allowed to subsidize industry and use currency manipulation in order to dump products into markets and bankrupt another country’s industry?

                          China doesn’t play by the rules and they haven’t for a long time. We had finally have a president who is standing up for America. That last part really burns you up doesn’t it?
                      • Rick Whitten · Information Technology Specialist at State of Iowa
                        • Ben Bailey: Of course I support the idea of helping American workers. Tariffs might do that under some circumstances. These tariffs punish our allies, like Canada. It is insane to impose tariffs with only a week's notice. There is no justification for them to be 25%, instead of a lower amount. And again, it hasn't actually happened yet. It is likely that someone will talk him out of it.
                      • Ben Bailey · Red Pill Dispenser at Pepe's
                        • So let me get this straight, you are against tarrrifs against a fascist dictatorship, that uses its own unfair trade practices and literal slavery to destroy American industry and jobs?

                          This report is from 2010 but it’s a very simple to understand take on the situation. China cheats, f’em!

                          “The latest statistics released on March 18 by the BEA show that for every $1 that the United States bought from China in 2009, the Chinese government only let its people buy 28¢ of American products. Although the Chinese economy was growing by 8.7%, the Chinese government managed to shrink Chinese imports of American goods and services.”

                          Do you see how Trump has backed you people into a corner?
                      • Rick Whitten · Information Technology Specialist at State of Iowa
                        • Ben Bailey: Some very liberal people have wanted tariffs against countries like China because of their labor practices. They protested the TPP and at world economic summits. They are mostly liberal Democrats.

                          Here are a few people against Trump's tariffs: Scott Walker, beer and soda companies, auto dealers associations, the National Retail Association, the National Review, the Cato Institute, and a number of Republican senators.
                      • Ben Bailey · Red Pill Dispenser at Pepe's
                        • Рик Уиттен, of course they have, Trump is a true centrist who is reaching across the aisle once afain.

                          I would’ve fully supported Obama imposing trade penalties on China for any number of their illegal actions. You probably would have too, but since you’re such a partisan hack (russian troll) you’re against them when it’s Trump taking a stand.
                      • Joseph Hickey
                        • Iowa, you can proud. This is what you wanted. I hope the rest of the planet boycotts this country. Farmers, tourism,farm equipment etc Desperate times call for desperate measures. Throw the bums out. If America and Iowa, have to sacrifice for the nation, so be it.
                      • Bob Vander Beek · Iowa City, Iowa
                        • To learn that Trump did this without consultation of his experts on labor and international relationships/diplomacy at a time when he was in a fit of anger is telling. China's steel imports to the U.S. is only a few percent of Chinas sales. European allies sell us much more. That's why they've already promised to slap tariffs on Harley Davidson and other key businesses in other states represented by leaders in congress.
                      • Lynn Griebahn Jr. · Dentist at Self-Employed
                        • any other day of the week big mouth Leftists like Rick and Bob are screaming for higher minmum wages in the USA. A reasonable person might think Trumps efforts to protect our steel industry and high paying union sterel jobs would find favor with big mouths like Bob and Rick. But their emotional hatred for Trump overcomes anything good Trump does. I am enjoying the show. I really feel sorry that Bob and Rick are so bitter. Bitterness is a poison you drink take hoping it hurts your enemy, Please continue
                          • Bob Vander Beek · Iowa City, Iowa
                            • Not onlly will these proposed tariffs not result in significant new jobs in steel. They will cause both a loss in jobs in manufacturing the needs steel and higher consumer prices. That is according to people includiing members of related positions in the Trump admiiniistration he did not consult. Only Wilbur Ross in the administration had even suggested this tariff.

                              Now try reading the nations this tariff most affects and the retaliations already planned.
                          • Gerald Ott
                            • Krugman @ New York Times. “. . . What would happen instead (of increasing US output, I.e. “trickle downing”) is that the Fed would raise rates sharply to head off inflationary pressures (especially because a 20 percent tariff would directly raise prices by something like 3 percent.) The rise in interest rates would have two big effects. First, it would squeeze interest-sensitive sectors: Trump’s friends in real estate would become very, very unhappy, as would anyone who is highly leveraged (hello, Jared.) . . . Second, it would drive up the dollar, inflicting severe harm on U.S. export sectors. Greetings, farmers of Iowa!”
                              • Antonio Gambino · Illinois Institute of Technology
                                • You cut and paste some quote from Krugman?..LOL
                                  The leftists so called expert? Ha!!
                                  You just lost the argument.
                              • David J Gudenkauf
                                • An article coming from a commodities trader? No wonder why the issue is about greed. There is a fine balance about trade and screwing your labor force over it. Sure the soybean farmer might feel a problem but the Solar and Aluminum workers will get a chance to get their jobs back in America. So they we can buy our own products in America and compete with American jobs and have more taxpayers to pay our own debt and increase jobs for immigrants and not just the few soybean farmers. So is the price of returning jobs back to America and getting people back to work worth the price? Or is having children running the streets in poverty while commodity brokers get Walmart’s to close down Small businesses in America and shut down the small communities while we get Walmart prices? If the living wage is what America is about then is Walmart the living model?
                              • Lynn Griebahn Jr. · Dentist at Self-Employed
                                • One day the Left complains that evil corporations are leaving the US and shipping’s jobs overseas to save a few bucks and avoid regulations like pollution regulations . Trump is trying to bring back jobs by making things fair and these two creeps are complaining? Explain this to me, anyone. Rick or Bob please explain this. But maybe these guys are just trouble makers