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Trump’s Trade Pullout Roils Rural America


homersapien

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After the U.S. withdrawal from the Trans-Pacific Partnership, other nations launch 27 separate negotiations to undercut U.S. exporters.

 

EAGLE GROVE, Iowa—On a cloud-swept landscape dotted with grain elevators, a meat producer called Prestage Farms is building a 700,000-square-foot processing plant. The gleaming new factory is both the great hope of Wright County, which voted by a 2-1 margin for Donald Trump, and the victim of one of Trump’s first policy moves, his decision to pull out of the Trans-Pacific Partnership.

For much of industrial America, the TPP was a suspect deal, the successor to the North American Free Trade Agreement, which some argue led to a massive offshoring of U.S. jobs to Mexico. But for the already struggling agricultural sector, the sprawling 12-nation TPP, covering 40 percent of the world’s economy, was a lifeline. It was a chance to erase punishing tariffs that restricted the United States—the onetime “breadbasket of the world”—from selling its meats, grains and dairy products to massive importers of foodstuffs such as Japan and Vietnam.

The decision to pull out of the trade deal has become a double hit on places like Eagle Grove. The promised bump of $10 billion in agricultural output over 15 years, based on estimates by the U.S. International Trade Commission, won’t materialize. But Trump’s decision to withdraw from the pact also cleared the way for rival exporters such as Australia, New Zealand and the European Union to negotiate even lower tariffs with importing nations, creating potentially greater competitive advantages over U.S. exports.

A POLITICO analysis found that the 11 other TPP countries are now involved in a whopping 27 separate trade negotiations with each other, other major trading powers in the region like China and massive blocs like the EU. Those efforts range from exploratory conversations to deals already signed and awaiting ratification. Seven of the most significant deals for U.S. farmers were either launched or concluded in the five months since the United States withdrew from the TPP.....

More at:

 http://www.politico.com/magazine/story/2017/08/07/trump-tpp-deal-withdrawal-trade-effects-215459

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I cannot even begin to act like I understand all the complexities of international trade and its implications for American workers.  It does seem like every effort made in this area has had the net effect of stepping on blue collar workers and enriching a big international companies, as well as the countries where all the jobs get exported to.  So I understand their frustrations and suspicions of any new trade agreements that seem to be in the same vein.  It does seem unfair that the US enter into agreements like these with countries that get to compete for our jobs, without having to play by the same rules on things such as workers' rights, environmental regulations, government subsidizing and so on.

All that said, economics is hard.  

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Well, to me, the biggest take-away from this article is that it was a huge mistake to simply drop out of the TPP negotiations without an alternative plan - which we don't seem to have.

The demonization of NAFTA as part of Trump's populism was overblown IMO and including the TPP with it was stupendously short-sighted.  (And yes, Bernie Sanders was also wrong on this.)

But then, in general, I tend to align myself with the (traditionally) Republican view that free trade is a good thing and is in our overall interest.  

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This is a tough one. Trump was right that many of the deals we signed were good for the other countries and bad for the US. Like Homer and many Republicans I believe in free trade. But it is a complicated issue. Some countries prop up their industries so it is not free trade including the US. I agree the deal Trump stepped on as a whole was a bad deal but as this article shows there were pieces that were good for the US.  Ideally we go back to negotiating table and make better deals but while waiting for this to happen American workers could and will suffer.

The other issue isn't just signing new agreements but having penalties and enforcing them when somebody cheats. Other countries often agree to environmental standards and safe work standards to sign the deal then don't follow through we then do nothing about their cheating.

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I'm with trump on this one. bernie too. we usually  lose out on trade.Trump campaigned on this very idea and they still voted for him 2-1? they are to blame.

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8 minutes ago, alexava said:

I'm with trump on this one. bernie too. we usually  lose out on trade.Trump campaigned on this very idea and they still voted for him 2-1? they are to blame.

Except the net loss of jobs due to NAFTA was extremely minimal. 

http://www.politifact.com/truth-o-meter/statements/2016/mar/07/bernie-s/sanders-overshoots-nafta-job-losses/

Free trade also garners Americans lower priced products across many goods.  Sure, we can tear these trade agreements up and call out a boogeyman, or we can understand that as a whole, Americans have benefitted greatly from free trade.  For example, the cost of electronics has dramatically decreased as they are made more and more overseas.  If made in the U.S., considering taxes, cost of labor, etc, these would likely shoot up in price.

Realizing this, Americans really have a binary choice:  pay more for products (including produce from Mexico) or continue down a trade path that has been lucrative for the average American.

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12 minutes ago, Brad_ATX said:

Except the net loss of jobs due to NAFTA was extremely minimal. 

http://www.politifact.com/truth-o-meter/statements/2016/mar/07/bernie-s/sanders-overshoots-nafta-job-losses/

Free trade also garners Americans lower priced products across many goods.  Sure, we can tear these trade agreements up and call out a boogeyman, or we can understand that as a whole, Americans have benefitted greatly from free trade.  For example, the cost of electronics has dramatically decreased as they are made more and more overseas.  If made in the U.S., considering taxes, cost of labor, etc, these would likely shoot up in price.

Realizing this, Americans really have a binary choice:  pay more for products (including produce from Mexico) or continue down a trade path that has been lucrative for the average American.

Price is set by demand more so than cost. I don't consider most of what we call "trade" to even be trade. When an american company develops a product in the US to the demand of the US then produces it in asia ships it back to the US to market and sell..... nothing is being traded.

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Keep in mind also that NAFTA was negotiated 20 years ago and does anyone really believe that nothing has changed in the years since that makes it desirable to renegotiate the terms and assure that there is adequate balance?        And of course the TPP was opposed by just about every member of congress...both sides of the aisle....and Bernie and HC both ran against it.   One of the few issues where both were correct.

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3 hours ago, AU64 said:

Keep in mind also that NAFTA was negotiated 20 years ago and does anyone really believe that nothing has changed in the years since that makes it desirable to renegotiate the terms and assure that there is adequate balance?        And of course the TPP was opposed by just about every member of congress...both sides of the aisle....and Bernie and HC both ran against it.   One of the few issues where both were correct.

Considering free trade has historically been a conservative (Republican) cause, that's an interesting comment.

 

 

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37 minutes ago, homersapien said:

Considering free trade has historically been a conservative (Republican) cause, that's an interesting comment.

 

 

Fair trade......not the same thing as free trade but of course you know that I am sure.

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9 minutes ago, AU64 said:

Fair trade......not the same thing as free trade but of course you know that I am sure.

Whatever.

"Free trade" agreements have traditionally  been a conservative cause.

Search it.

 

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16 hours ago, alexava said:

Price is set by demand more so than cost. I don't consider most of what we call "trade" to even be trade. When an american company develops a product in the US to the demand of the US then produces it in asia ships it back to the US to market and sell..... nothing is being traded.

To a point on your price comment.  Cost absolutely matters (it's a large reason why cheaper shirts made in China cost less but sell more volume).  No company is in the business of losing money, so if a TV costs $100 more to manufacture here vs overseas, you can damn well bet that cost will be passed on to the consumer.

Understand your trade argument with regards to development and shipping, but again, we as consumers get that product cheaper at the end of the day because it is being done this way.  People forget that we are a consumer based nation, much more so than just about every other country on this planet.  We will never be trade neutral or export more than we import with likes of Mexico.  But the goodness we get back in return is an overall benefit to keeping costs down.  However, the pulling out of the TPP certainly hurt some of our own interests (the farmers example above) without our president or other populist leaders (Bernie) thinking it through.

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The cost savings is eaten up by the company that produces and sells it. They sell those products for as much as they will bring. Hence demand. There are some products that serve us well in that regard. Some don't. You pay the same amount no matter where it's manufactured. 

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1 hour ago, alexava said:

The cost savings is eaten up by the company that produces and sells it. They sell those products for as much as they will bring. Hence demand. There are some products that serve us well in that regard. Some don't. You pay the same amount no matter where it's manufactured. 

I work for a major tech company and we manufacturer electronics overseas.  Our demand is high, but we are very competitive with another company in our space.  Profit margins on the product are very slim.  Believe me on this one, you don't pay the same amount no matter where it's manufactured.  There's a reason the product is built elsewhere.  To do so in the U.S. would make it unaffordable for the average customer.

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2 hours ago, alexava said:

The cost savings is eaten up by the company that produces and sells it. They sell those products for as much as they will bring. Hence demand. There are some products that serve us well in that regard. Some don't. You pay the same amount no matter where it's manufactured. 

That's not really true for all products and companies.  For instance, if you paid full price for whatever the latest iPhone is, you're paying between $650-850 depending on model and storage capacity.  If you built it here and sourced all the parts here, you'd be looking at about $2000 for that same iPhone.  Just the materials cost (not even factoring in labor) would jump from around $190 to over $600.

https://www.marketplace.org/2014/05/20/business/ive-always-wondered/how-much-would-all-american-iphone-cost

 

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