Tariffs are bad for Iowa: Capitol Solutions
As published in The Des Moines Register on March 15:
Our economy is headed in the right direction. In 2017’s last quarter, the economy grew at 2.5 percent. Private-sector jobs defied expectations and grew by 313,000 in February. The national unemployment rate of 4.1 percent is at a 17-year low. Consumer confidence is the highest since 2000 and wages are up 2.6 percent compared with a year ago.
President Trump has helped steer the economy in this direction. With Congress’ help, he repealed some onerous regulations that stymied productivity. He showed leadership with Congress in delivering tax relief to workers and job creators. But primarily, we can thank the ingenuity, grit and work ethic of Americans for our economic gains.
But this can change. How? By a reversal in our trade policies.
While President Trump has talked about scrapping NAFTA, he hasn’t so far, and hopefully he won’t. By refusing to join the Trans-Pacific Partnership, he chose to not engage in new trade opportunities and markets. He has yet to negotiate bilateral (country to country) trade agreements. And now President Trump is going forward with tariffs on steel and aluminum coming into the United States.
Tariffs are taxes and increase the price of goods bought by Americans. The increased prices will be paid by Iowans. And that’s less money for Iowa consumers and their families.
We should be building on the economic success of the new tax relief law Iowans are benefiting from. Instead, tariffs could blunt the positive outcomes of the new tax code. Higher prices on canned goods, farm machinery, appliances, vehicles, and other products are only part of the problem with tariffs.
Countries are threatening to impose tariffs on imported U.S. products, and the easiest target is our agricultural exports. Agriculture income is down four years in a row and retaliation from the European Union, China, or any other country against our commodities could be devastating to farmers, producers, rural communities, and Iowa’s economy.
In 2015, Iowans exported $10 billion worth of goods. In addition, the United States has a large agriculture trade surplus with China — 60 percent of Iowa’s soybeans are exported to China. Years of low commodity prices have hurt farmers. Any reduction in the demand for soybeans, corn, pork, or beef would make matters worse.
Earlier this month, I questioned U.S. Treasury Secretary Steven Mnuchin about the logic and strategy of tariffs during a U.S. House Appropriations Committee hearing. His answers left me and many of my colleagues with more questions and concerns.
I also led a bipartisan letter to President Trump with U.S. Sen. Joni Ernst and the entire Iowa congressional delegation asking President Trump to reconsider his decision on these tariffs.
When President Trump announced the specifics of his tariff plan, it was not as broad and global as he had previously announced. Thankfully, he narrowed his approach and provided exemptions for Canada and Mexico.
I understand President Trump’s desire to strengthen our domestic steel and aluminum industries. We should all want this, but there are better ways to help ensure trade rules are enforced. We can work bilaterally to seek solutions and cases can be brought before the World Trade Organization.
President Trump prides himself as a keen negotiator and expert on trade. Perhaps his updated approach with exemptions helps us escape a trade war. Time will tell. But tariffs have previously invited retaliation and harmed our economy and Iowans. And that’s the last thing we need. What we need are markets and more trading partners, and fewer tariffs and taxes.