U.S. Senator Chuck Grassley (R-IA) pushed back on the major new tariffs President Joe Biden placed on a variety of Chinese goods on Tuesday.
“I’m for free trade, because Iowa manufactures and does services, and does agriculture way beyond what we consume domestically, and we must be exporting,” Grassley told AgriTalk Host Chip Flory.
“I think that this is going to invite retaliation by China, and it’s possible retaliation could be (against) agriculture,” Grassley added.
Flory said there’s been almost a “rolling retaliation” in place, a freezing of relations between the U.S. and China, because China appears to have backed away from U.S. commodities such as corn and pork.
“Do you think that by design, or is that by just simply the fundamentals of the market?” Flory asked.
“I don’t know the price of Brazil soybeans compared to U.S. soybeans – and what that does to a Chinese decision – but we shouldn’t be surprised that there’s this sort of potential for retaliation,” Grassley said.
However, Grassley said China “invites” some of the tariffs because the country emphasizes overproduction in manufacturing.
“That’s a subsidized overproduction, and then they’re exporting it onto the world market. They aren’t following the rules of international trade the way that they should,” Grassley said.
A Look At Lessons From History
The new tariffs reminded Grassley of the Smoot-Hawley Tariff Act, U.S. legislation passed on June 17, 1930, that raised import duties to protect American businesses and farmers.
“We should learn a lesson that the United States thought it could tariff its way out of an economic problem, but that’s not necessarily the case as history shows. It can create more problems,” Grassley said.
Some historians believe the Smoot-Hawley Tariff deepened the Great Depression and “may have contributed to the rise of political extremism, enabling leaders such as Adolf Hitler to increase their political strength and gain power,” write the Editors of the Encyclopedia Britannica.
“Free trade and capitalism have elevated the lives of a lot of people around the world,” Grassley said.
Flory responded by citing former President Donald Trump’s reaction to the Biden administration’s decision.
“(Trump) said that he will be even more aggressive with tariffs on China, and more aggressive on imports, in general. That’s obviously concerning to you,” Flory told Grassley.
“Sometime in the four years of the Trump administration, I brought this up in the Oval Office,” Grassley recalled.
“He had two of his economists there with him. And I said, ‘Your two economists aren’t serving you well if they’re backing up these high tariffs that you want to do.’ I don’t know what sort of an impact it made, because he still ended up with the tariffs. But I wanted to educate him about the history of high tariffs and the negative impacts they have,” Grassley added.
No Enthusiasm for GREET
Flory asked Grassley about his reaction to the GREET model, designed to calculate GHG reductions more accurately, incorporating new data and methodologies including climate-smart agricultural practices for soybeans and corn as a feedstock for sustainable aviation fuel.
GREET stands for Greenhouse gases, Regulated Emissions, and Energy use in Technologies.
Flory said it appears there are a lot of boxes to check on the production side to make U.S. corn eligible for the aviation fuel market.
“It’s just a bad situation,” Grassley said. “In other words, we’ve got a bunch of bureaucrats in Washington, D.C., that don’t know anything about how we handle our agricultural products in Iowa. And they write these regulations that nobody’s going to be able to make use of.”
For more on Grassley’s response regarding GREET, check out the AgriTalk conversation here.
