WASHINGTON, D.C., U.S. — As 2019 dawns, U.S. agriculture faces a complex and challenging array of forces emanating from Washington that could affect its health and vitality. They fall into three broad categories: trade; governing; and foreign policy.
The longest list of issues continues to be on the trade front and related economic developments. The Trump administration late last year concluded negotiation of a U.S.-Mexico-Canada Agreement (USMCA) to replace the North American Free Trade Agreement (NAFTA). Now the USMCA must go to Congress for approval. With the Democrats having taken control of the House of Representatives, that approval is by no means assured.
China and the United States also called a truce Dec. 1, 2018, for 90 days to their intensifying trade dispute. U.S. Trade Representative Robert Lighthizer and his office now have U.S. President Donald Trump’s blessing to lead the China negotiations, in part because Lighthizer shares Trump’s views on the benefits of tariffs and the dangers of failing to rein in Chinese subsidies, intellectual property theft and non-market behavior. Stock markets have reflected growing concern about the effects on the global economy of this bilateral dispute. Talks are beginning as this article is being written, but the March deadline for concluding a deal is very tight, with important implications for U.S. soybean and meat exports.
Credit policies also affect U.S. agricultural export prospects. The Federal Reserve has begun to tighten monetary policy through interest rate increases. The Fed’s actions come at a time when other regions are continuing to ease credit conditions to stimulate their economies. This imbalance in monetary policies has contributed to a stronger dollar. While that has helped keep energy prices lower, it has added to the competitive burdens facing U.S. agricultural exports. A strong dollar raises U.S. commodity prices for importers while making them less competitive with exports from other regions.
The Democrats swept into power in the House of Representatives and re-installed Nancy Pelosi as Speaker — only the second time in history a Speaker of the House has lost and regained the position. Early signs indicate that the large group of freshmen members of the House seem likely to be more vocal and less patient than in previous years.
Pelosi also may have had to make promises of influence and position to many of them to regain the gavel. While many of these new Democrat House members are pulling the party to the left, other freshmen Democrats won in previously Republican districts, on more moderate platforms. How the Democrats will handle these conflicting forces deserves careful monitoring.
Meanwhile, Republicans increased their Senate majority modestly. This may strengthen Majority Leader Mitch McConnell’s capacity to support or defend Trump, if he chooses. In any case, a divided Congress promises more partisan hearings by Democrat-led House committees into allegations of collusion, obstruction of justice and other charges against Trump, his associates and family. Special Counsel Robert Mueller’s report and actions likely will support such efforts.
To this volatile mixture will be added campaigns by a number of Democrats for their party’s presidential endorsement for 2020. Included will be jockeying for the party’s best positioning between its liberal wing seeking a more activist government and more moderate candidates seeking to appeal to centrist voters and the working class voters that elected both Barack Obama and Trump.
Republican candidates for House and Senate in 2020 also face some tough positioning choices. Mr. Trump’s base support has proven both intensely loyal to him and not enough to win closely contested races. Three Republican Senators facing re-election in 2020 already have signaled opposition to the government shutdown over immigration, which may undermine McConnell’s control in the Senate, perhaps sooner rather than later.
The most recent flashpoint has been foreign policy, where Trump’s decision to bring U.S. forces out of Syria immediately prompted Defense Secretary James. N. Mattis to resign. It also triggered criticisms from within Trump’s party and some walking back of the decision. Because the executive branch has great freedom of action in foreign policy, a Trump acting largely free from experienced foreign policy advisers could become even more of a concern to the party’s leadership. A recent Mitt Romney op/ed in The Washington Post is a reminder that some in the party are not afraid to challenge Trump’s leadership.
Alongside Syria are several other potential flashpoints in foreign policy. One, of course, is China, where Taiwan’s independence and Chinese island-building join trade as points of friction. Another is Russia, where Trump has long been criticized for not challenging President Vladimir Putin and his government even as a Republican-led Congress tightened sanctions on Russia and many of the oligarchs close to Putin.
A third flashpoint is North Korea. Both Kim Jong-un and Trump have signaled a desire to meet again. North Korea’s demand for sanctions relief before de-nuclearization, however, clashes with the American position that de-nuclearization must precede sanctions relief. Positions may be hardening, again, on both sides.
The final potential flashpoint is ISIS. The war on terror continues, even as ISIS-controlled territory shrinks. As an unconventional struggle, it is unclear what victory would look like. Moreover, there remain a number of failed or failing states that could harbor ISIS forces, should they be driven from current havens.
Clearly, there is much to de-stabilize either the global economy or the political landscape, with an unpredictable Trump in the middle of the confusion.