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DAVID KRUSE

By Staff | Mar 25, 2016

While Michigan may be somewhat of a unique state relative to its negative perception of trade agreements, free trade and open desire for protectionism, it was evident in the primary results of both parties that protectionism is selling very well this campaign season with many voters.

Bernie Sanders overcame negative polls to beat Hillary in Michigan and Trump walked away with the GOP win.

Hillary has moved away from free trade even distancing herself from NAFTA passed during her husband’s term as President. She lost in Michigan in part because she is not as rampant for tariffs and canceling trade agreements as Bernie will be.

Most believe that she moved toward a more protectionist stance because of Bernie doing well in that regard. These politicians run focus groups where they attempt to find out what voters think and considering the degree to which all the candidates have moved away from supporting a global economy and toward protectionist policies opposing trade agreements that must well be the dominant sentiment today.

They are telling voters what they want to hear. At this point it appears as though the U.S. will elect a protectionist President as voters will have no other option on the ballot from the likely nominees of both parties.

Donald says that he is not a politician, but he is actually the best. Donald takes nativism/protectionism from defense to offense when talking about his desire for a trade war in order to right all of the perceived wrongs he says has been done to the country via trade deals.

The protectionists adeptly use the public lack of any depth of knowledge on how trade works, what the impact has been, as well as a total lack of appreciation that 95 percent of the world consumers live outside U.S. borders.

From the perspective of agriculture, they need food production and while the U.S. is a major food and feedstuff exporter they can and will seek to work around us and without us if we ruin our standing as a reliable supplier.

U.S. protectionism will force other countries to recalculate their food security and the role the U.S. plays into that. While the candidates all disparage the benefits of trade, Donald does take the misinformation to the level of propaganda by equating trade deficits to trade theft.

That is goofy. Nobody was making U.S. consumers buy imported goods. U.S. consumers have benefited from world trade. They bought Toyotas because they thought they were a better vehicle.

Under Donald’s trade theory, when you buy a Toyota you are being stolen from. The U.S. has historically had more open markets, with lower tariffs than the rest of the world had and trade agreements leveled the playing field in our favor by opening markets to U.S. products by reducing foreign trade barriers.

The trade regimen that was being experienced relative to U.S. competitiveness in world markets by sector was not worsened by free trade agreements.

Much of what is negative and is being attributed to trade between the U.S. and the rest of the world would have happened anyway.

Manufacturing job loss was not all trade related as technology replaced more manufacturing jobs than were lost to trade. Thirty percent of the U.S. economy is now export driven.

Frankly, the quality of my Dodge pickup can be directly related to the U.S.auto industry having had to compete with the quality of imports. The growth seen in the global economy turning hundreds of millions of peasants into consumers growing a global middle class would not have happened without trade.

It was the best thing to happen to the human race in this millennium. By abruptly circumventing global economic growth with a trade war as the biggest economy in the world turns inward would be a catastrophic mistake of global proportions.

Deere is reportedly laying off another 225 workers in Iowa and Illinois due to slow sales. Through reducing costs they have remained profitable so far during this downturn.

The word that I got was there are “still trainloads of tractors leaving Waterloo for somewhere, many are being exported.”

The protectionists claim that tariffs will bring the manufacturing jobs back to the U.S. How many high-paying manufacturing jobs would they kill in the U.S. when the tariffs being proposed provoke retaliation?

One result of a trade war would be that Deere will not be exporting tractors and Cat will not be exporting dozers and the layoffs seen to date are just a small down-payment on what would result in these industries.

A trade war would be devastating to companies like Deere, Cat and any other enterprises that export ag or ag-related products.

That includes Cargill, Bunge, Tyson and on and on. It would be job suicide for Deere, CAT, or other similar plant workers to vote for the protectionists.

For the ag sector it will be an exercise in adaptive survival.

The electorate is being duped into the belief that if we just impose tariffs on imports that jobs will magically reappear here in the U.S.

Demagogues are taking advantage of “low educated voters” as Trump refers to them placing false premises in their heads.

Imposing tariffs will actually kill many existing jobs before long any are created.

I am amazed at the inch-deep analysis that the trade protectionist policies have gotten. Japan is reportedly close to ratifying the TPP.

Other members of the trade block will ratify it too, leaving the U.S. out.

It is difficult to see a scenario where there is a vote on TPP taken by Congress given the nominees of both political parties will likely campaign openly against TPP.

If the U.S. is out, China will make a major attempt to get in. Then all of Asia will become a trade bloc without us and they will move to pull South America and Europe into their trade orbit, too, as America goes protectionist raising trade barriers.

This is all insane which means that both the candidates of both political parties have gone mad.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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