Trade Deal -- or Lack of One -- Is Key in N.D. Senate Race

Trade Deal -- or Lack of One -- Is Key in N.D. Senate Race
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In the upper Midwest, the brisk autumn air has already signaled the annual harvest season. But farmers in North Dakota, where an election in two months could be pivotal in the fight for control of the U.S. Senate, are feeling another kind of chill: They fear that President Trump’s trade battles have created lasting obstacles to their livelihoods. 

In North Dakota, Chinese tariffs on soybeans have thrown a wrench in the finely tuned production line that makes agriculture a profitable pursuit. Farmers are now betting on high-stakes negotiations that don’t appear to be coming to fruition anytime soon. Although polls show that the president’s support remains strong in this deep-red state, political observers say that the farmers’ plight has complicated Republicans’ hopes of ousting longtime Democratic incumbent Sen. Heidi Heitkamp in November.

Soybeans may sound esoteric to city dwellers in Washington, but as a cash crop in this country it’s second only to corn – worth $41 billion last year alone, much of it sold overseas. Earlier this year, China retaliated against the U.S. by enacting tariffs on U.S.-grown soybeans. This was not merely a symbolic gesture: The Chinese are the number one consumer of American soybeans, which they feed to livestock and use for cooking oil. Addressing domestic political pressure to reach an agreement with China, deputy White House press secretary Lindsay Walters put out a statement last month saying U.S. representatives met with their Chinese counterparts and discussed “how to achieve fairness, balance, and reciprocity in the economic relationship.” But these talks did not result in a deal.

In the meantime, the impasse is roiling North Dakota politics. Democratic state Sen. Jim Dotzenrod, who runs a soybean and corn farm in the southeastern part of the state, said he had expected more progress in the negotiations by now. “I had operated under the assumption that the pressure of this upcoming election would be so great, especially in Midwest, that it would force some sort of action -- that something would have to give,” he said. 

Dotzenrod runs the farm with his son, Rudy, and explained that farmers begin to meet with their banks in November to settle up on this year’s debt and secure a line of credit for next year. If soybean prices remain low, farmers will be left with the choice of dumping their beans below cost or holding their product in the hopes negotiations come to a positive conclusion. Some may not have the room to personally store their goods and will have to pay to hold the crops in grain elevators — if they can eventually find a buyer, given the surplus of soybeans out there. 

“The only way we can carry on with our way of life is trade,” Dotzenrod told RCP. “And it’s a world market. If we’re saying to the world, ‘We don’t need you,’ [then] we’re not going to be able to carry on.” 

Other farmers, more sympathetic to the administration’s end goal, say they are willing to hang in there, for now. “I understand the trade negotiations. I understand the end goal is to make this better for everyone,” said Paul Thomas, a farmer in north-central North Dakota. “I’m happy to be part of that solution, but I can’t take the brunt of it forever.” A grower of several types of crops including soybeans, he said the tariffs, combined with a drought in his part of the state, have made him decide to store his harvest and hope that the market improves with a trade deal. 

Thomas said that prior to the tariffs being put in place, when prices were higher, he pre-sold an estimated 40 percent of his soybean crop. Until prices change, however, it’s more cost-effective for him to hold the rest. It will still cost him money for storage, since he’s needed to buy more barrels, but he sees little choice. 

The administration is trying to help farmers get by in the interim by offering up to $12 billion in programs, including payments to farmers. There will also be $200 million put towards developing new foreign markets. Trump announced in July that he’s working with the European Union to expand the soybean market and said the EU promised to buy more U.S. soybeans. Farmers say it will be a long time before they see the results of this change and that the means of sending their product to Europe is a complicated process. 

Farmers are concerned that in the meantime China will find a different source of soybeans, namely South America. They fear countries there will profit off the trade war and re-sell U.S. goods to China at a higher rate. The U.S. Trade Association said it did not have any information on the subject and referred RCP to the Department of Agriculture. The USDA did not respond to a request for comment.

How all this will go down in North Dakota’s voting booths come November is a crapshoot. Heitkamp faces a tough challenge in the state from Rep. Kevin Cramer, the state’s at-large congressman since 2013. He currently leads in RCP’s polling average by a mere 0.5 percentage points. Both candidates have urged the administration to use a different negotiating tactic to reach a new trade deal with China. Commerce Secretary Wilbur Ross visited the state last month to discuss the policy with farmers as a new poll shows the president’s support slipping by double-digit margins.

A survey from the Farm Journal showed that out of the nearly 70 percent of farmers who voted for Trump in 2016, only 56 percent would vote for him again. Forty-one percent now view him unfavorably and 35 percent say they view him “less favorably.” The poll, with 2,300 respondents, was conducted at the beginning of August. 

Farmers say this is just the beginning of the political consequences if the U.S. and China do not reach a deal. Although those who spoke to RCP were reluctant to wade into politics, they all agreed that if the marketplace does not return to what it was prior to the imposition of tariffs – or improve significantly due to changes – the status quo in this dependably Republican state may not hold.

Sally Persons is RealClearPolitics' White House correspondent.



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