Trump’s trade move sparks concern among Iowans

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By Molly Hunter

molly-hunter@uiowa.edu

University of Iowa Professor of economics John Solow said President Trump’s executive order to withdraw the U.S. from the Trans-Pacific Partnership on Monday could have negative consequences for Iowa’s agricultural economy.

The partnership included Singapore, Brunei, New Zealand, and Chile as members. The U.S. was among the non-party members, along with Mexico, Australia, Peru, Vietnam, Malaysia, Canada, and Japan.

Solow said Mexico is one of our largest buyers of corn, just ahead of China. A decline in exports to Mexico could have major consequences for Iowa’s farm economy.

“We could see a continuing slump in agricultural prices, and that … could hurt Iowa quite a lot,” Solow said. “Iowa is very much an exporting state. … We are very interlinked with the rest of the world.”

A prepared statement issued by the office of Sen. Joni Ernst, R-Iowa, on Monday said Ernst was disappointment with the executive action.

“With one in five jobs in Iowa dependent on trade, access to new markets is critical to our state’s economy,” the statement said. “With the growing demand for our agricultural products across the world, it is imperative that we ensure a level playing field for American farmers and manufacturers to have a fair opportunity to compete in these markets.”

Solow said the partnership is about more than tariffs and trade bargains. The agreement also included intellectual-property protections.

“One of the problems the U.S. has had with China is that American companies like software or make movies, and the Chinese companies copy it without paying licensing fees,” he said. “Getting China to agree to crack down on illicit production of patented things … has been a problem for American companies.”

While China is not involved in the TPP, Solow said, the U.S. withdrawal could still affect the future of international trade.

“My bigger concern is simply engaging in a trade war. Having fairly open international trade … is something that most all economists of all political stripes tend to agree with,” Solow said. “This is one of the few places where Democrats and Republicans generally have common ground.”

Apart from international trade difficulties, the Trump administration may find Congress to be another obstacle.

“President Trump can say, ‘I’m going to put a tax on this or that’, but … it takes an act of Congress, and it’s not clear that Congress is going to go along with that,” Solow said.

While many Republicans supported Trump during his campaign, Solow said, there is still much disagreement about many of his policies.

Patrick Wronkiewicz, an active member of College Republicans, said he supports the executive agreement despite its deviation from the traditional conservative viewpoint.

“Even though free trade might increase overall wealth for both sides, there are winners and losers. America would be a bigger loser than a winner,” he said. “The way the tax codes are set up … creates an incentive for companies to move their jobs overseas. They’re keeping wealth overseas, and that wealth isn’t always taxed back into America.”

Wronkiewicz believes a free-trade policy goes against Trump’s goal of putting America first, which is one of the reasons he supports Trump. Wronkiewicz said he hopes Trump’s trade policy will dissuade businesses from leaving the U.S.

Although there has been backlash from Republicans in Congress over Trump’s move to withdraw the U.S. from the partnership, Solow said, the news hardly comes as a surprise.

“[Trump] said he was going to do it all along, and Secretary Clinton said she was going to do it … by the middle of the campaign,” he said.

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