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Trade wars are not good, or easy to win

Despite widespread opposition from his own party, business leaders and allies around the world, President Donald Trump on Friday imposed stiff tariffs on steel and aluminum.

While aimed at protecting some U.S. steel industry jobs, the effects will be felt harshly by consumers who will pay more for everything from beer cans to automobiles and by area farmers and manufacturers who are likely to see their exports devalued as other countries counter with their own tariffs.

Shortly after making the tariff announcement — one that surprised even Trump’s top staff, including his own economic adviser Gary Cohn who later resigned –Trump tweeted that “trade wars are good, and easy to win.”

As with many things the president glibly states, his views on trade wars are contradicted by history and fact. Like real wars, trade wars have a way of escalating, are rarely “won” and are ever harder to extract oneself from.

Trump’s last-minute decision to exclude Canada and Mexico from the new tariffs — if the countries give concessions on renegotiation the NAFTA agreement — may seem like some solace. But the move could do even more serious harm to Minnesota businesses and farmers.

That’s because the Minnesota economy, and particularly farm income, benefits greatly from NAFTA, which heavily favors farmers exporting corn, soybeans and other farm products.

And it’s not just those who export hogs or corn who will be hurt by a redrawn NAFTA or by retaliatory tariffs by China and other trading partners.

Those farm products, many flowing to Minnesota’s two largest trading partners, Canada and Mexico, not only bolster farm income but have a widespread economic impact across the state’s economy. A renegotiated NAFTA is certain to make those farm exports less valuable and hammer the agribusiness economy.

The state is also home to a large number of major corporate headquarters — such as 3M, CHS, Land O’Lakes — that provide so much employment and economic benefit. Those companies and thousands of smaller ones that make goods that are exported benefit mightily from free global trade.

While Trump’s move is broadly opposed by congressional Republicans, it’s unlikely they will move to blunt the tariffs through legislation. Presidents have long been given broad authority to handle international trade without Congress interfering.

The only hope is that Trump, who is not known for sticking with his pronouncements, can be swayed to divert from a path that will lead to higher prices for consumers and a net loss of jobs for Americans.

— Mankato Free Press

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