Agricultural experts troubled by GOP Senate candidates’ tariff talk

  • Comments
  • Print

Indiana's three Republican Senate candidates continue to voice support for President Donald Trump's trade brinkmanship with China, even as economists and agriculture experts warn that a trade war could drive farmers into bankruptcy while hurting the state economically.

Indiana would be hit hard if China moves forward with retaliatory tariffs on corn, soybeans and pork, which are among a number of measures the country has proposed in response to Trump's call for tariffs on aluminum and steel, experts say.

"There's a lot of fear," said Andy Fix, a corn and soybean farmer from Shelby County. "Already with just the posturing we've seen between the Trump administration and China, we're seeing a lot of added volatility come into the soybean market that we haven't seen in a long time."

If they're worried about the potential fallout, none of the Indiana Republican Senate candidates are showing it.

With few major policy differences to distinguish themselves, Reps. Todd Rokita and Luke Messer, and former state Rep. Mike Braun have each clamored to portray themselves as the biggest Trump supporter. Whoever wins the May 8 primary will face Democratic Sen. Joe Donnelly in November.

"I want to be based on data and not emotion, so I definitely continue to support the president on these targeted tariffs," Rokita said Monday. A similar message has been echoed by Messer and Braun, though all three have been avid supporters of free trade in the past.

That's of little solace to Indiana's agriculture industry, which would be slapped with 25 percent tariffs on its main exports. It also puts the candidates at odds with farmers, who tend to vote Republican.

China is the world's largest user of soybeans and the proposed tariff would result in an estimated $150 million a year drop in Indiana soybean revenues, assuming a 5 percent drop in prices, according to Purdue University agriculture economist Christopher Hurt. That's a 10 percent decline in annual incomes, Hurt estimates. U.S. hog prices would drop by about $3 a head, he said.

"To take that big of a hit from China will have a large effect on Indiana agriculture," said Bob White, director of national government relations for the Indiana Farm Bureau. "I think Indiana will lose some farmers over this should it be implemented in totality."

Chinese President Xi Jinping pledged Tuesday to open his country to wider foreign competition, a move praised as conciliatory. But longtime China observers caution that Beijing has promised in the past to open its market and curb hardball tactics without following through.

Trump even acknowledged this week that the foreign response to his tariffs could cause hardship for farmers, whom he praised as "great patriots" while promising to "make it up to them." He did not offer specifics.

The U.S. economy may be booming overall, but agriculture has been hurting for at least four years, said White, who worked on the Senate Committee on Agriculture when former GOP Indiana Sen. Richard Lugar was chairman.

Of the candidates, Braun particularly has been all over the map in recent months. During a February debate he voiced opposition to tariffs. But that has since changed. Last week he praised Trump's actions, while suggesting farmers could find other markets for their products. This week, Braun said that the federal government should take action to protect farmers.

"During these negotiations, President Trump has instructed (Agriculture) Secretary (Sonny) Perdue to shield our farmers from China's shortsighted retaliations and I trust him at the negotiating table to deliver better deals that help our country," Braun said in a statement.

Farmers are skeptical.

"It's hard to see where feasibly they can make it easier on the farmers. You can't go back to the days of the old farm program with direct payments to make up that difference," said Fix.

Messer, meanwhile, has largely avoided saying anything of substance about the issue. He said Tuesday that Trump's "aggressive posture" was "welcome." But he also said steps need to be taken to make sure "we don't hurt Indiana manufacturing and we look out for Indiana agriculture," without specifying what those steps should be.

Rokita said he is concerned about farmers but supports Trump's tariffs on steel and aluminum because he thinks they will benefit Indiana's steel industry.

Purdue University economist Wally Tyner said that doesn't take into account the state's automobile and heavy equipment manufacturing sector, which makes up a larger share of the state's economy and would be hit hard by rising steel and aluminum costs.

"One in four jobs in Indiana is in transportation manufacturing," said Tyner. "Four of the top ten exporting cities in the country are in Indiana. They would all lose."

That includes diesel engine maker Cummins, which is headquartered in Columbus; Subaru's Lafayette plant, which is part of Rokita's congressional district; and Greensburg's Honda plant, which is in Messer's district. Kokomo, which is also in Rokita's district, makes auto parts and Chryslers. Rolls Royce also has a presence in the state, as does heavy equipment maker Caterpillar.

Then there is Elkhart County, which has long billed itself as the "RV capital of the world."

Farmers are hoping cooler heads prevail.

"Something like this, it can have a significant and immediate impact on your bottom line this year," said Fix. "When you have farms potentially on the brink, it may seem like an emotional response, but it's a very real concern."

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.