Trump touts tariffs as trade leverage. But what do U.S. farmers and retailers think?


JUDY WOODRUFF: President Trump and China have
ramped up their war over trade, and the president has spent much of his term confronting other
countries over trade practices. This weekend, he announced new tariffs and
alternated between insult and praise for China’s president. He also threatened to order American companies
to move their operations out of China. To do so, he would use a 1977 law in a way
that has never been used by a U.S. president before. William Brangham takes two looks at major
sectors of the American economy are caught in the crossfire. WILLIAM BRANGHAM: We first look at the trade
war’s impact on U.S. farmers with Denny Friest. He’s a fourth-generation farmer near Radcliffe,
Iowa. He grows soybean and corn and raises pigs. Friest also represents his district at the
Iowa Corn Growers Association, and he’s just coming from the group’s annual meeting in
Des Moines this week. Denny, thank you very much for being here. Before we get to the larger sense of how the
farming community in Iowa is doing, I’m just curious how things are specifically on your
farm, because all three of those crops I mentioned are right at the middle of this whole trade
maelstrom. How are you personally doing? DENNY FRIEST, Iowa Corn Growers Association:
It has been a challenge for all of us farmers this year. We have had a wet spring. We have had delays in our planting. But we are probably better off than a lot
of our people. Half of our soybeans that we produce in this
country get exported. So it has been a huge impact in our demand
for soybeans. We, as farmers, have invested millions of
dollars through all of our commodity group over the years to definitely new markets especially
overseas, to create demand for our products. And to see these tariffs come and knock them
down, where nobody — where we lose these markets, that has been a real disappointment. And it has really angered a lot of farmers,
that we are being played on by not being able to continue to access these markets with our
free trade agreements. WILLIAM BRANGHAM: As I mentioned, you just
came from the Growers Association meeting. Was this the — I know there’s a lot of concerns
about the administration’s policies with regard to ethanol, as well as this trade fight that
is going on. What were you hearing from other farmers? DENNY FRIEST: The biggest concern the farmers
were sharing was the fact that we were not given the promises that President Trump gave
on the rural fuels — renewable fuel standards that were promised from him. We have exemptions of — 31 exemptions for
small refinery exemptions this past year, to the tune of 1.43 billion gals of ethanol,
equivalent to 510 million bushels of corn. This has tremendously effected our demand
and has dropped our price down. And we were promised in the election that
he would support ethanol. We just need President Trump to follow up
on the promises he made to us. WILLIAM BRANGHAM: So those renewable standards,
on top of the trade war, seem like a bit of a one-two punch. What about the argument that some people make,
which is that China has to be challenged on some of its practices? And, yes, that might mean some short-term
pain for farmers. The president has put forward two aid packages. But that that short-term pain will yield a
long-term benefit? What do you make of that argument? DENNY FRIEST: Farmers are in general support
of that. But by dragging this on a longer, longer period
of time, this is going to cost us. It is not going to be effective at all for
us as farmers. This is going too far. At first, we were — we supported it. We needed to work and get China back to playing
more evenly. But just carrying it on and on and increasing
the tariffs, it is really, really hurting our financial positions here as farmers. WILLIAM BRANGHAM: I know that you were a supporter
of the president, as were many farmers in America. And they thought he was really going to champion
your cause. Has these — this past year, past year-and-a-half
made you change your position on that? DENNY FRIEST: I’m definitely not as strong
a supporter as I was of him. We have farmers from all over the state representing
their counties, their producers all over — from all over. And most farmers are very much concerned that
he has not followed through. Supporting President Trump next election cycle
is going to be a challenge for me if he doesn’t make some improvements for us. WILLIAM BRANGHAM: All right, Denny Friest
of the Iowa Corn Growers Association, thank you very, very much for your time. DENNY FRIEST: Thank you. WILLIAM BRANGHAM: Now let’s get the view of
some larger retail businesses about the impact of this trade fight. David French is the senior vice president
for government relations at the National Retail Federation. Welcome to the “NewsHour.” DAVID FRENCH, National Retail Federation:
Great. It’s great to be with you. WILLIAM BRANGHAM: Help me understand. We just heard a farmer’s perspective on how
the trade war looks to them. A lot of different things roiling in this
economy. The president is fighting with the Federal
Reserve. We see these trade fights, the tariffs as
well. From a retail perspective, how is this trade
war or this trade fight look to your industry? DAVID FRENCH: Well, let’s start. The economy’s in a good shape — in a good
place. Consumers are very confident. Consumers are buying things. And that’s good for retailers. Tax reform has helped. Regulatory reform has helped. But the trade war has cast a pall over all
of that and threatens to undo all of the good work President Trump has done by raising a
lot of uncertainty and causing a lot of disruption for retailers, for our customers, for farmers,
for a lot of people, small manufacturers, you name it. WILLIAM BRANGHAM: On the retail sector in
particular, help me understand how that works. Let’s say I’m Kroger or Costco or Walgreens
or whatever. How does a trade war impact retail businesses? Walk me through that process. DAVID FRENCH: So you named Kroger and Costco. Those are two interesting businesses. Both of them have made substantial investments
in doing business in China, not just to import goods, but also to export and develop markets
with the Chinese consumer. Remember, China has a middle-class that’s
larger than the entire population of the United States. So it’s really important for retailers to
consider trade with China to be a two-way street. WILLIAM BRANGHAM: So the issue being that,
if we have tariffs being waged back and forth between China and the U.S. and them against
us, that your supply chain gets disrupted, that you simply can’t budget, you can’t plan
for the next year? Is that what it is? DAVID FRENCH: That’s part of it. It’s also — it’s a growth market for American
brands and American retailers as well. American products are very popular in China,
whether it’s American pork, or American blue jeans, or American luxury goods. They’re very popular, in high demand. And so I think retailers are concerned that
both the supply chain impact is real, but also the ability to grow and develop that
Chinese market is also real. Let me also add, on the supply chain, nobody
builds a supply chain and starts the preposition by, we’re going to source our products from
as far away as possible. There’s a — it’s a very complicated process
to design a supply chain. You have to find a place that can manufacture
the goods at the high enough quality, a low enough — at a low enough price. You have to find a place where you can do
testing and assure that the consumer is going to be safe if they use that product. You have to have logistics support, so you
can transport that product into the U.S. market. And all of these things — China happens to
be one of the places that does all of these things very well. There aren’t other places around the world,
and certainly not the United States. WILLIAM BRANGHAM: So the same argument that
I would put — that I asked Denny Friest about, I would ask you, which is, the president argues
we had to challenge China on its behavior. And, yes, it does cause some pain for certain
sectors of the economy, but if it pays long-term benefits, isn’t it worth it? What would your industry say to that? DAVID FRENCH: We certainly agree that we should
be confronting China over the way that they handle trade practices, their abuse of technology,
their I.P. theft. All of those are valid goals. Our concern is really with the tactic, the
tactic of tariffs. In order for tariffs to work, first, a lot
of pain has to be felt by U.S. consumers. The supply chains won’t shift overnight unless
U.S. consumers, U.S. businesses are feeling the pain. WILLIAM BRANGHAM: That’s just a fact. You can’t change that. DAVID FRENCH: That’s just a fact. Otherwise, nobody’s changing behavior. So the pain has to be first felt here. But then there’s the threat of retaliatory
tariffs. So what we heard from Denny was the risk that
China will cut us off from markets we have developed for decades. Many farmers have been able to expand their
operations because of the growth of the Chinese market. Now they’re facing losses. They’re not planting. All of these things are real. Other businesses, manufacturers that sell
things like airplanes perhaps could also lose access to the Chinese market. So tariffs are a blunt tool. They don’t really work very well. They’re not surgical. They’re not solving this problem. They haven’t worked so far. And we’re concerned that it makes it harder
for us to get the solution we need on the strategic imperative, which is fixing the
way China does business. WILLIAM BRANGHAM: David French of the National
Retail Federation, thank you. DAVID FRENCH: Thanks.

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