We are two months from the Donald Trump inauguration and as he builds his cabinet, both sides of the aisle cheer or express disappointment. But there are other things happening inside the Trump camp that are likely creating stress for the future of his trade policy.
Going back to the campaign, there has been one thing that bothers me inside the Trump base regarding trade policy.
The base of Trump’s support was rural America, which can be broken down into two main groups: the agriculture community and the rust belt. Both of these groups have much in common in values and reasons for voting for Trump, but there is a huge difference in their views on trade.
As we wait to see how President-Elect Trump handles the impending NAFTA renegotiation and the death of TPP, I think we have our real first wedge issue inside the Trump support group.
Since the beginning of his campaign, Trump has stated that NAFTA is not just the worst trade deal ever, but the “worst deal ever.” The rust belt identified with this mantra, but it definitely conflicts with the feeling that agriculture has about NAFTA.
As mentioned in a great article breaking down the NAFTA numbers then and now, DTN’s Chris Clayton states,
Trump came back repeatedly during the debate and stated he would renegotiate NAFTA, or terminate it. “The jobs are being sucked out of our economy. You look at the places I just left. You go to Pennsylvania, you go to Ohio, you go to Florida, you go to any of them. You go to upstate New York. Our jobs have fled to Mexico and other places. We’re bringing our jobs back. I’m going to renegotiate NAFTA. And if I can’t make a great deal, then we’re going to terminate NAFTA and we’re going to create new deals. We’re going to have trade but we’re going to terminate it. We’re going on make a great trade deal. If we can’t, we’re going to go our separate way because it has been a disaster.”
For agriculture, NAFTA has been extremely beneficial in Canada, the U.S. and Mexico.
According to NaftaNOW.org…
As NAFTA has contributed to further integration of the trading partners’ agricultural sectors, Mexican industries have required more U.S. agricultural inputs. For example, U.S. feedstuffs have increased Mexican meat production and consumption; likewise the importance of Mexican produce to U.S. fruit and vegetable consumption is growing. Grains, oilseeds, meat and related products make up three -fourths of U.S. agricultural exports to Mexico, while beer, vegetables and fruit account for three-fourths of U.S agricultural imports from Mexico.
Besides China, Canada and Mexico are the United States’ next largest trading partners. Based on all of this, who wouldn’t want trade with the neighbours to the north and south?
May I present to you the auto and steelworkers of the United States. Herein lies our wedge issue in the Trump camp.
All of Trump’s anti-NAFTA and anti-TPP rhetoric is structured around building support in Michigan, Wisconsin, Indiana, Illinois, Ohio, and Pennsylvania for workers not in agriculture. All along this time period farmers and ranchers have been hoping that this is the one campaign promise that Donald Trump was going to never come through on. Based on the video released this week, things are not looking good for the current TPP and NAFTA agreements.
Some U.S. farmers and ranchers are probably relying on the thought — supported by Sam Clovis’ comments on Agritalk — that Trump will fix the parts of NAFTA that don’t work and leave agriculture alone. Some trade experts feel this is naive and shows his lack of understanding the trade negotiation process. Just leaving agriculture untouched might be quite difficult.
The rust belt wants jobs back and trade to be halted or significantly changed to favour domestic production. With trade having such a high profile during the campaign, and the rust belt being such a large component of why Trump won the election, the President elect faces some very difficult choices on trade.
Farmers and ranchers want NAFTA, TPP and trade, in general. But Trump also must deal with the pressure to create domestic jobs in the rust belt and that could prove difficult without compromising on agriculture. Keeping his supporters unified will prove to a mighty big challenge before the midterm elections in two years.