Just a day after celebrating new jobs in Kentucky’s aluminum industry being created by tariffs enacted by the Trump administration, Gov. Matt Bevin faced questions about the negative effects of those new tariffs on Thursday morning at the annual Kentucky Farm Bureau ham breakfast in Louisville, as farmers dependent on international markets now face an escalating trade war.
Bevin attended an event Wednesday celebrating the restart of productions lines at Century Aluminum just east of Owensboro that will create 300 new jobs, with the company’s chief executive directly crediting the Trump administration’s 10 percent tariff on imported aluminum as making it possible.
At the ceremony, Bevin called this development a win for the president’s “America First” strategy on trade, and cautioned against efforts to undue the administration’s tariffs over fears of a harmful trade war, as these workers’ families would be the ones who are hurt.
But the retaliatory tariffs that American goods have faced from China, Canada and the European Union have led to direct pain, fear or uncertainty for several other major industries in Kentucky, including the $8.5 billion bourbon industry, automotive manufacturing and agriculture. The U.S. Chamber of Commerce estimates that the trade war could cost Kentucky $1.5 billion and impact 539,000 jobs.
Soybean farmers, who export half their crops overseas, have already been hit with a 20 percent decrease in commodity prices, and the Kentucky Soybean Association estimates that a continuation of the trade war will cost the state’s farmers $200 million this year.
The impact of such tariffs on farmers has been a topic of much discussion at the Kentucky State Fair over the past week, which continued at the ham breakfast filled with 1,500 attendees from the agriculture industry, along with elected officials.
However, when asked about the possible negative impact of these tariffs on farmers as he arrived Thursday morning, Bevin discounted their role in falling commodity prices, saying that winners and losers should not be looked at “as a zero sum game,” as farmers should “have faith that this strong economy will rise, and that all these boats will rise with it.”
“Right now the economy is booming,” said Bevin. “There are some that are doing better than others. Commodity prices have been down for some time. If you try to pin them on any one thing, it’s not that simple. It’s a very cyclical industry, the agricultural industry. It always has been.”
Bevin not too concerned about tariffs’ effect on farmers in Kentucky: pic.twitter.com/6A6DL1OAww
— Joe Sonka ? (@joesonka) August 23, 2018
Speaking to the audience at the breakfast, Bevin noted that he was just asked about the effect of tariffs by reporters, but said that “our time doesn’t allow for us to get into a deep and political conversation or an economic conversation” on that topic.
The governor then continued with a 12-minute speech that not only thanked farmers for their hard work, but their faith in God, patriotism and respect for the American flag — in addition to decrying the plight of fatherless children.
At the end of his speech, Bevin mentioned there may soon be an announcement that an unnamed company would be investing $650 million in the state. He then alluded to the Century Aluminum announcement a day earlier, stating that “just in the last week, we’ve had some incredible announcements in parts of our state that have been on the periphery for some time, economically.”
Speaking directly after the governor was Louisville Mayor Greg Fischer, who not only praised local restaurants participating in the city’s Farm-to-table program, but took a U-turn on the topic of tariffs and their impact.
“As I’ve been here this week, it is really clear in talking to you all that the biggest issue right now is the tariffs that are hitting our farmers — particularly our soybean farmers — very, very hard, with lots of uncertainty,” said Fischer.
Noting his 30 years as a businessman, Fischer said that free market principles should win out so that farmers aren’t the victims of protectionist policies.
“I believe in capitalism, I believe in the free market,” said Fischer. “I believe also in making sure that our global trading partners treat us fairly. Sometimes that’s tough. But I also believe our Kentucky farmers should not have to be the collateral damage in a trade war.”
Noting that he may well have a very urban constituency, the mayor said he could still spot the enemies of the agricultural sector.
“Most of us understand the forces that are trying to kill our farmers,” said Fischer. “The question is, do we as a nation have the will to take on those forces and help our family farms. Everybody in this room knows that cheap food sometimes comes at a really high price for the rest of us. I know I’m just the mayor of Louisville, but I hope you all wake up to this challenge.”
Though he wasn’t in attendance this year, at last year’s ham breakfast Sen. Mitch McConnell also made a pitch for free trade and against protectionist policies, noting how much the state’s farmers relied on exports.
McConnell said earlier this summer that he has tried to convince the Trump administration to reverse its tariffs, as it would harm the state’s economy, but said there is nothing the U.S. Senate could do to stop him. Criticizing the Trump administration’s intention to provide $12 billion in emergency aid to farmers hurt by retaliatory tariffs, Sen. Rand Paul recently tweeted that “if tariffs punish farmers, the answer is not welfare for farmers — the answer is to remove the tariffs.”
Republican Commissioner of Agriculture Ryan Quarles told the audience Thursday that half of soybeans, a fourth of corn and 80 percent of tobacco crops are exported overseas each year, noting that “Kentucky’s agriculture economy is dependent on international markets.”
Republican Congressman Andy Barr of Lexington said that he supports “the objective” of Trump’s trade policies, but told Insider Louisville that he is against protracted trade negotiations and uncertainty stretching into next year, as that is when a trade war will begin to batter Kentucky’s bourbon industry.
“We need to make sure that we wrap up these negotiations and get better deals before the end of the year, because then the tariffs would bite,” said Barr. “So that’s been my message to the administration.”
Despite that fear, Barr praised Trump for the state of the economy and tax cuts signed into law last year, saying he is glad that the president is coming to Kentucky to campaign for him in the coming months.
State Rep. Rocky Adkins, D-Sandy Hook, the House minority leader who is expected to run for governor next year, said that farmers in his district and around the state are concerned about more retaliatory tariffs.
“When (soybean farmers) lose $3 or $4 a bushel and you’ve got your life earnings out there in a plowed field with soybeans, and then all of a sudden — you were calculating on a certain price being $12 or $13 — now you’re looking at $8 or $9, there’s a lot of concern,” said Adkins.
Sen. Robert Stivers, the Republican president of the state Senate, told Insider he wasn’t sure yet if farmers would be hurt by the tariffs, likening the situation to the halftime of a football game.
“The aluminum industry … it makes a little bit of difference there, they’re seeing it as a positive,” said Stivers. “But I think what you have to do is wait to see what the end result is. This is a long-term type of give and take and back and forth to try to level the playing field across the board for everybody.”
Meanwhile, the trade war between China and the United States escalated once again on Thursday. The Trump administration announced tariffs on $16 billion worth of Chinese goods, with China promptly responding with tariffs of the same amount on a range of American imports, including cars and coal.