The U.S. trade policy and Ohio
September 29, 2020 The Times-Gazette
U.S. trade policy. How’s it been working for Ohio?
Alan Guebert, who writes for the weekly Ohio-based rural newspaper Farm and Dairy, wrote the following in his most recent column: “Farmers and ranchers are learning another costly lesson that most already knew — trade wars aren’t just unwinnable, they’re damnable. The proof is any time any one of them looks at any current futures market chart or any monthly bank statement.”
Guebert went on to take note of the USDA’s 2020 Farm Income Forecast. “It showed that annual federal farm program payments in each of the last four years, FY2017 through FY2020, respectively, were $11.5 billion, $13.7 billion, $22.4 billion, and $37.2 billion. U.S. farm country, $85 billion worth of bandages and iodine, with more of both promised in 2021,” he said.
The wreckage of farm income was not helped by the effects of climate change and the derecho winds that blasted millions of acres in different parts of the Midwest, but trade policy may be the policy derecho that has done the most damage.
Simultaneously, another event piqued my interest with respect to Ohio and the effects of our trade policy. It was a just released report issued by Boston University’s Global Development Policy Center, together with the Institute for Policy Studies, and The Groundwork Collaborative. Full disclosure — my son-in-law is the director of BU’s Global Development Policy Center. Generally, the report concludes that: “Over the last several decades, U.S. trade policies have failed most Americans. Under the guise of “free trade,” special interests have captured trade policy to extract wealth at home and abroad and leave working people to bear the costs.”
While the report speaks both generally and specifically about the effects of trade policy writ large, there are some important inferences for Ohio. It reports that the current trade war with China “has cost Ohio soybean farmers their biggest market. In 2016, China bought $13.7 billion in U.S. soybeans. By 2018, that figure fell by nearly half, to $7.1 billion.” The Ohio Soybean Association has said, “tariffs on Chinese products and the resulting retaliation by China on soybeans makes us less competitive in the global market.”
Owning a small farm myself that alternately produces both soybeans and corn, I know that most farmers don’t want federal handouts. They’re not sustainable. What they want is steadfast and dependable markets, whether that happens to be China, Mexico, the European Union or whomever.
I always thought that in terms of employment, Ohio was one of the nation’s top manufacturing states. Think of the Ford Motor Company, GM, Chrysler, Honda (later), Goodyear, Whirlpool and Libby Glass. So I was rather surprised to learn that the Cleveland Clinic and Walmart each employ more workers in Ohio than Honda, Chrysler, Ford, GM and Whirlpool combined. The trade war with Canada has raised the price of aluminum that many of these companies need. The current administration’s tariffs on aluminum raised the prices of all aluminum-containing goods, and that means car manufacturing, washing machines, aerospace, and construction among others, and then there’s the downstream effects on jobs.
A report by Hill and Stewart at Ohio State University (The Economic Impact of the Trade Skirmish of 2018 on the Nation and Ohio) stated that, “There are thirty-six jobs in Ohio’s metal-using manufacturing industries for every job in steel and aluminum manufacturing.”
Job growth in Ohio is troubling. The effects of the pandemic on job growth must be viewed as devastating, but a pre-pandemic view, according to the Bureau of Labor Statistics, shows job growth withering under current trade policy, with a high of 96,700 in 2014, to 60,800 in 2015, 36,200 in 2016, 42,500 in 2017, 34,100 in 2018, and 3,700 in 2019.
The report by BU’s Global Development Center and its two partners also points to the influence of U.S. manufacturers, “who wanted to off-shore their factories to exploit cheap labor overseas. Workers and small businesses, rooted in their American communities, have paid the price. Off-shoring has become easier, wages have stagnated, and job growth has dried up.”
Another report by the Federal Reserve on December of 2019 (Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector), speaks of the multiple ways in which trade policy affects the economy. It concludes that industries subject to tariff increases often experience reductions in employment, which can be good for the corporation but tough on jobs. But other adverse effects include rising input costs, retaliatory tariffs, relative increases in producer prices and the potential to harm competitiveness among overseas markets because of the retaliatory tariffs.
The tripartite report suggests many fixes to current trade policy, but the one that struck me was the creation of Trade Advisory Panels. “Corporate interests dominate U.S. Trade Policy through the U.S. Trade Representative’s ‘advisory committees’. These closed-door clubs of well-connected corporations have special access and input. Instead, workers, small businesses and public interest groups should be the ones to offer advice on trade, since they live with the consequences.”
Makes sense to me.
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