Will Ag Survive the Art of the Trade Deal?
Before he became president, Donald Trump cut his teeth and made billions as a New York City real estate mogul. He made million dollar business deals on a daily basis. Sometimes those deals worked, sometimes they didn’t. But the net cumulative result was a huge empire that brought him fortune and fame, including cutting a path to the Oval Office.
I’m not an expert on doing million dollar business deals (I don’t even haggle with used car dealers), but I can assume that those negotiations are not for the faint of heart. It appears that those negotiations start with an outlandish proposal that the opposition will never accept but that sets parameters for ongoing debate. There is little diplomacy, it’s take or be taken.
Eventually, there is a compromise and a final deal. I can only surmise that in most negotiations before becoming president, Trump came out on the plus side of the transaction more often than his adversary. If not, the next deal would bring retribution.
There is little doubt that President Trump has brought that art of negotiation to trade talks. He’s followed the same game plan, because that’s what he knows best. Our trading partners certainly weren’t prepared.
A day into his presidency he cancelled the Trans-Pacific Partnership. A year ago he started renegotiating the North American Free Trade Agreement (NAFTA). He’s placed enormous tariffs on Chinese goods. Mexico is angered over President Trump’s threats to build a wall and once-friendly Canada is not so friendly anymore.
To say that President Trump’s approach is risky would be a clear understatement. After all, if he loses it won’t just be his own pocketbook that gets hurt, as it did when his own business deals fell through. Agriculture has already felt the wrath of tariffs, to the tune of $12 billion in government support which is a drop in the bucket compared to the total estimated loss for many commodities. Dairy farmers on both sides of the Canadian border wait to see who will blink first and how their respective balance sheets will be affected.
But maybe we are starting to see this hard line approach actually begin to yield results. We were able to get a deal signed with Mexico, although Congress has yet to approve it. China is starting to feel the impact of tariffs and diplomats have at least agreed to negotiate better trade terms, although that has yet to go anywhere. Canada has inferred that they may provide concessions on dairy, mostly out of fear of President Trump’s threats to place tariffs on automobiles coming south across the border.
Certainly, Americans aren’t accustomed to the brash tweets, threats and the outlandish comments President Trump makes when he’s talking trade. Our trading partners aren’t comfortable with it either. But I’m wondering if President Trump’s old business adversaries are recognizing a pattern, maybe saying under their breath “there he goes again.”
Perhaps the art of the business deal works no matter if you’re trading Manhattan real estate or shiploads of milk powder. Undoubtedly, farmers will continue to lose sleep until we find out for sure.
What do you think? Is President Trump doing the right thing on trade? Send me your thoughts at [email protected].