Renewed trade talks, lifting ethanol restrictions could be boon for Iowa

Source: By Ken Thomas and Kevin Freking Associated Press • Posted: Friday, April 13, 2018

Rick and Grant Kimberley are cautious about the potential $150 billion in tariffs and their effects on the U.S. agriculture markets.

President Donald Trump has asked top administration officials to look into rejoining trade negotiations with Pacific Rim countries and possibly removing some restrictions on ethanol sales.

Both changes could have a significant effect in Iowa, opening up more overseas markets for farmers and increasing the demand for corn and ethanol.

Trump looked to reassure Midwest governors and lawmakers worried about a looming trade war with China during a Thursday meeting at the White House.

The meeting included Iowa Gov. Kim Reynolds and Sens. Chuck Grassley and Joni Ernst.

The president said he had “deputized” trade representative Robert Lighthizer and chief economic adviser Larry Kudlow to look into the U.S. rejoining the Trans-Pacific Partnership, according to Sen. Ben Sasse, R-Neb.

“I’m sure there are lots of particulars that they’d want to negotiate, but the president multiple times reaffirmed in general to all of us and looked right at Larry Kudlow and said, ‘Larry, go get it done,'” Sasse said.

Eleven countries signed a sweeping trade agreement last month that came together after the U.S. withdrew from the TPP trade agreement last year.

Trump’s rejection of the deal has rattled allies and raised questions at home about whether protectionism will impede U.S. economic growth.

Kansas Sen. Pat Roberts, the chairman of the Senate Agriculture, Nutrition and Forestry Committee, said he was “very impressed” that Trump had assigned Kudlow and Lighthizer “the task to see if we couldn’t take another look at TPP. And that certainly would be good news all throughout farm country.”

Trump told farm-state governors and lawmakers that he was pressing China to treat the American agriculture industry fairly. Midwest farmers fear becoming caught up in a trade war as Beijing threatens to impose tariffs on soybeans and other U.S. crops, a big blow to Midwestern farmers, many of whom are strong Trump supporters.

Trump has mused about re-joining TPP negotiations in the past but his request to his top aides show a greater level of interest in rejoining the pact he railed against during his 2016 campaign.

During the meeting, Trump suggested the possibility of directing the Environmental Protection Agency to allow year-round sales of renewable fuel with blends of 15 percent ethanol.

The EPA currently bans the 15-percent blend, called E15, during the summer because of concerns that it contributes to smog on hot days. Gasoline typically contains 10 percent ethanol. Farm state lawmakers have pushed for greater sales of the higher ethanol blend to boost demand for the corn-based fuel.

The oil and natural gas industries have pressed Trump to waive some of the requirements in the federal Renewable Fuel Standard law that would ease gasoline and diesel refiners’ volume mandates. Farm state lawmakers fear that would reduce demand for the biofuels and violate the RFS law.

Monte Shaw, the Iowa Renewable Fuels Association’s executive director, said the president’s comments are “a jolt of positive news at a time when farm country needed some.”

Shaw, though, said he remained worried about a “last-ditch effort” from Texas Sen. Ted Cruz to tie year-round E15 sales to proposals to cap renewable fuel blending credits that are used to track industry use.

“E15 is not some spoonful of sugar to help the RFS waiver poison go down,” he said. “Destroying hundreds of millions of gallons of demand with RFS waiver credits is not a ‘win-win.’”

North Dakota Gov. Doug Burgum said Trump made some “pretty positive statements” about allowing the year-round use of E-15 ethanol, which could help corn growers.

The administration is also considering the possibility of the federal government aiding farmers harmed by retaliatory tariffs from China, according to lawmakers on Capitol Hill and advocacy groups. But some key senators oppose the approach. “We don’t need that. We do not want another subsidy program. What we want is a market,” Roberts said during a congressional hearing this week.

The meetings came as an array of business executives and trade groups expressed alarm to federal lawmakers Thursday about the impact that tariffs will have on their business.

Kevin Kennedy, president of a steel fabrication business in Texas, said tariffs on steel and aluminum imports have led U.S. steel producers to raise their prices by 40 percent. He said that’s shifting work to competitors outside the U.S. including in Canada and Mexico because they now enjoy a big edge on material costs.

Representatives for chemical manufacturers and soybean farmers also expressed their concerns to the House Ways and Means Committee, which is examining the impact of the tariffs.

The U.S. and China are in the early stages of what could be the biggest trade battle in more than a half century. Trump campaigned on promises to bring down America’s massive trade deficit — $566 billion last year — by rewriting trade agreements and cracking down on what he called abusive practices by U.S. trading partners.

Scott Paul, president of the Alliance for American Manufacturing, urged lawmakers and the administration to stay the course in getting tough on China. He said China’s theft of intellectual property has inflicted serious damage to U.S. companies and threatens the country’s future economic outlook.

Iowa is an agricultural powerhouse, exporting products all over the world. That’s why many are concerned about a possible trade war with China.