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Tariffs Promise Long-Term Damage to Ag, Also Hurting RV and Metal Makers

Agtegra CEO Chris Pearson says that even if Donald Trump snaps his fingers today and ends his failed tariffs, his ag co-op members will suffer long-term effects:

He said that even if tariff and trade issues are resolved with China — one of the state’s leading consumers of soybeans — the damage will be evident in the future.

“Our primary market is exports to the West Coast. Even if we get China fixed, will their demand for soybeans, especially from the West Coast, be as it was before, and I don’t think so. It’s going to take a while,” Pearson said.

“What do we do when there’s uncertainty in the industry? We don’t spend money,” he said [Shannon Marvel, “Drug Testing, Low Wages Make It Difficult to Fill Local Jobs,” Aberdeen American News, 2019.07.13].

Pearson made this comment at last week’s Aberdeen forum with Minneapolis Fed chief Neel Kashkari, who has said he doesn’t see the tariffs imposing too much drag on the U.S. economy but has also acknowledged that “we have much more to lose than we have to gain in a trade war.”

Like agriculture, the recreational vehicle industry is among those losing in Trump’s reckless trade war:

Shipments of RVs to dealers have fallen 22% percent in the first five months of this year, compared to the same period last year, after slipping 4% in 2018, according to the Recreational Vehicle Industry Association.

The RV industry’s woes illustrate how even the most “American” of manufacturers, the kind of industries Trump has vowed to protect, can be heavily exposed to tariffs in a world of globalized supply chains.

Tariff-related price hikes have forced manufacturers to pass on some of the increased costs though higher RV prices, which in turn has contributed to slower sales. As dealers cut orders, many plants furloughed workers or reduced hours, including Renegade, which has reduced its headcount of 160 by about 10 workers since May at its two factories here.

…The cost of metals surged dramatically after sweeping tariffs on steel and aluminum were imposed last year. Those prices have since moderated, but manufacturers say many of the price increases on the metal parts they buy haven’t gone away [Timothy Aeppel, “Trump’s Tariffs Trip up the All-American RV Industry,” Reuters via Yahoo, 2019.07.18].

That moderation of metal prices has led to slower domestic production and more layoffs:

Now that prices have stabilized again, American steel mills have slowed production and laid-off workers. The Wall Street Journal reported last month that U.S. Steel experienced weaker-than-expected demand and reduced profit expectations in the second quarter of this year. On June 19, U.S. Steel announced that it would shut down two blast furnaces at its flagship plant in Gary, Indiana. The company’s stock price has fallen from about $37 per share on June 1, 2018, when the tariffs were enacted, to $14.14 during midday trading on Friday.

The same has happened in other industries that tariffs were supposed to help. As of December, Trump’s aluminum tariffs had created an estimated 300 jobs at a cost of $690 million. Two solar panel manufacturers that successfully pushed for new tariffs on Chinese-made solar panels last year are now bankrupt and out of business. And when Whirlpool lobbied the administration to tax imported washing machines, consumers wound up having to pay $1.2 billion more—and higher prices have reduced demand, punishing Whirlpool as well.

…”It is deeply ironic, not to mention painful to out of work steelworkers, that the administration’s protectionist steel tariffs have directly caused the layoff of over 80 Pennsylvanians working in the steel industry,” Sen. Pat Toomey (R–Penn.), one of the more outspoken congressional critics of Trump’s tariffs, said Friday. “Blanket tariffs on steel and aluminum from our allies distort prices, disrupt supply chains, and increase prices for consumers—including downstream users of these products, who collectively employ millions of Americans.”

…”The layoffs at NLMK were entirely predictable. Tariffs disrupt supply chains and business models, even in industries the tariffs are supposed to protect,” says Iain Murray, a vice president at the Competitive Enterprise Institute and author of a study on the moral and economic case for trade. “The tariffs destroy jobs in industries that use innovative models based around global supply chains. Tariffs slow innovation and it’s workers who bear the cost” [Eric Boehm, “At Least 80 Workers Are Losing Their Jobs at This Pennsylvania Steel Plant. Tariffs Are to Blame,” Reason, 2019.07.12].

Tariffs aren’t working for farming or metals production. Our Republican members of Congress need to end their sycophantic excuse-making and distraction and get back to making policy based on fact and evidence. End the tariffs.


  1. Porter Lansing 2019-07-18 09:53

    When skies are dark. When all seems lost. When life is hard. BLAME OBAMA!

  2. jerry 2019-07-18 14:56

    I don’t think Rounds, Thune and Dirty quite get the picture of what harm they have done to our economy with their blind support of the lying liar. How ya gonna see Mt. Rushmore without your RV? While our economy continues to tank, these guys just look at their belly buttons and sigh.

  3. jerry 2019-07-18 16:19

    Add John T.’s great blog post on what is going on with tourism in South Dakota. It’s the economy stupid, we now just need a new war in the sandbox of the Middle East to bring us full turn. BTW, has anyone seen the housing outlook? Looks like the good old days of 2007-2008. How can Republicans take a perfectly tuned economy and wreck it yet again?

  4. Debbo 2019-07-18 17:48

    The GOP is economically clueless. They’re also foreign policy clueless, domestic policy clueless and have no idea how to govern. Last, but not least, they are traitors to their country.

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