The Daily - Thursday, Apr. 5, 2018

Episode Date: April 5, 2018

Many farmers across the Midwest voted for Donald J. Trump in the 2016 election but hoped he would never follow through on his threats to impose tariffs on China. They feared that they would suffer if China imposed its own tariffs as payback. Now, Beijing has done just that, proposing tariffs on 106 types of American goods — including soybeans, corn and pork — in retaliation for President Trump’s plans to penalize Chinese trade practices. Guest: Eldon Gould, a farmer in Illinois who voted for President Trump. For more information on today’s episode, visit nytimes.com/thedaily.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today, across the Midwest, farmers voted for Donald Trump, but hoped he would never follow through on his threat of tariffs against China for fear of what would come next, retaliation against them by China. Now it's happened.

It's Thursday, April 5th. When those sow see you coming in, they'll come to attention. Those out there are going to be weaned tomorrow. Eldon Gold farms and raises pigs in Maple Park, Illinois. We called him on Wednesday afternoon, hours after China announced its tariffs. Hello? Hi, I'm trying to reach Mr. Gold. It's Michael Barbaro from the New York Times. That's not Michael, it's Eldon. Oh, no, I said I'm Michael. Oh, I'm sorry. I'm sorry. Well, I'm Eldon. I'm still Eldon. I hope so. How are you?

I'm just fine. Thank you. I appreciate you taking some time to speak with me. We'll give it our best shot. I'm just going to jump right in and ask you some questions about your background and that kind of thing. So here we go. How did you come into farming? Well, my father farmed and well, I guess most of my grandfathers did. I did go to the University of Illinois, but I never had any thoughts of doing anything other than come back home and farm. So as I tell people, I've been doing that for 60 years and still trying to learn how to do it right. You're being rather humble. So you always knew,

it sounds like, that you would spend your life farming. Yes, yes. And tell me a bit about your farm. Give me a sense of it. I'm going to just tell you about my portion, Michael. I'm actually part of a larger operation that my son is responsible for. But we just have just over 500 acres total. And normally 70% of that would be corn and maybe 30% would be beans, soybeans. And I have to subtract it off one or the other, but we usually have a few acres of winter wheat. So most of it is corn. Correct.

Lesser degree, it's soybeans. Correct. And how has farming in the United States changed in the many decades that your family has been doing this? Well, the obvious answers are the yields have literally doubled in even my farming career. And then over time, you know, rather than just the domestic user of crops, now an awful lot of them, pick a number, but in the neighborhood of 25% are exported. And because of the increased yields, we need export markets. And actually the whole economic scenario of production agriculture has been built around exports. And so it's a key ingredient in our total market today.

So 25% of U.S. agriculture ends up overseas, roughly. Yeah, I think that's pretty close. And what about for you? What percentage of your own crops likely end up abroad? Is a guess all right? Sure. I'm going to guess 90% of our soybeans are exported and probably 70% of our corn. So the vast majority of what you grow on your farm is leaving the United States. Yes.

So given that farming has become such a global business, as you're describing it, how important are federal policies to what you do? Does the U.S. government play an important role in the health of the agricultural industry? Well, yes, very, very important. Not only is government policy important, but, you know, in fact, I've heard it said, so this is not original thought, the weather is unpredictable, but the government is really unpredictable. There is a North American free trade agreement. And there shouldn't be. It's a disaster. But it is there. If you're president, you're going to have to live with it.

We will either renegotiate it or we will break it. Because, you know, every agreement has an end. You can't just break the law. Excuse me. Every agreement has an end. Every agreement has to be fair. Every agreement has to defraud. We're being defrauded by all these countries. It's called free trade and it is a plank of the Republican platform.

So I'm curious what you were thinking in 2016 as the presidential election started to heat up. At that time, I'll be the first to admit that I've got a Republican bias. And I guess I was probably a little surprised when President Trump secured the nomination. But I don't think there was any doubt in my mind that I would vote for him. But I was concerned about when the campaign was going on was, you know, his issues and campaign rhetoric on trade. And I was hoping that that might soften if he did win the election, because he would listen to some of his advisors. NAFTA was the worst trade deal in the history. It's like the history of this country. And China's entrance into the World Trade Organization

has enabled the greatest job theft in the history of our country. And were you worried that Trump would follow through on these policies that he was outlining as a candidate? I was slightly worried, but I guess I was more hopeful than what I am today or what I've seen happen in the last couple of weeks. And obviously disappointed that what has happened has happened. We'll be right back. Let's talk about what's happened in the last couple of weeks.

It's really my honor to start this process. It's going to be a very fair process. It's going to be very fair to other countries, especially those that treat us well. President Trump taking action today on trade, imposing stiff tariffs on imports of steel and aluminum from other countries, blaming those countries for destroying those industries here at home. It'll be 25% for steel. It'll be 25% for steel. It'll be 10% for aluminum. And it'll be for a long period of time.

Did you start to worry that once the United States put a tariff on steel and aluminum that would affect China, that China might do something in response. Well, in my mind, I had no doubt about if they would or not. The only question is, how many products and when was it going to go into effect? Once you start imposing tariffs, you don't do it in a vacuum.

Other countries respond. Can we expect any kind of retaliation on trade from Beijing? I think there's certainly some risk of it. The Chinese have chosen to slap import duties on a range of American agricultural products in response to Mr. Trump's decision last month. These are a bunch of goods that right now basically come from American red states. They're targeting areas where Trump supporters and Trump politicians are significant. So this is shot across the bow.

This is a restraint from the Chinese, I would say. We're still very early innings of this game. The Trump administration announced proposals to impose a 25 percent tariff on Tuesday for thirteen hundred Chinese goods. And now China's Ministry of Commerce has put out a statement saying that it's going to do tit-for-tat. This is the second wave of tit-for-tat tariffs being imposed between China and the United States.

The categories would include soybeans, automobile products, chemical products, and aircraft. And can we just point out the first item in that list, soybeans? Yeah. That really hits a lot of states that Donald Trump won. It hits families like mine. I mean, really, this is not what the American agriculture sector needs right now. So soybeans, corn, and pork are all on the list of products that China has decided to go after.

Yes. And as it happens, all three of those products are on your farm. Not a double whammy, a triple whammy. Just so I understand the logistics, when China puts a higher tariff on a product like soybeans, how does it actually work? Does it suddenly add a certain amount of cost to your ability to get it to China? I mean, what does it literally look like? Somebody's going to have to pay that tariff. So at some point in time, you know, the Chinese people say, well, rather than pay that tariff, I'm going to tell you to take a hike and you can live without the first product and say, well, maybe I'll just take some of the another.

So just to understand it, nobody wants to charge a Chinese consumer more for a product because they probably would be sensitive to the price. So they want somebody in the chain that goes back to you to sell it at a lower price in order to keep things more or less the same. Yes. But does that mean presumably that the people who send your crops or your pork overseas won't want to pay you as much for what you produce on the farm? That's correct. Okay. Somebody's going to have to eat that taro. And I can only assume that it's either going to be the Chinese paying it directly or the person handling the trade will have to pay it. But that's going to trickle back to the producer. And that's you.

So that, yeah, that's me. I guess you'd say we're the beginning of the chain of command. Other people would call it bottom feeders. Right. You're the starting point for the entire supply chain. Yes, yes. And if you had to guess this combination of kind of injuries to your business, how much do you think it's going to cost you over the next year if the tariffs stay in place? over the next year if the tariffs stay in place?

Oh, that's really a wag. Is that a familiar term in the paper industry? A wild last guess. Another phrase you've taught me today, no. You know, that is really a guess. I'm going to say it could easily affect our profit by, or, uh, increase our loss by, I don't know if 30% is out of line or not, but it's, I'm just going to throw that number out there and hope I'm wrong. And 30% suggests, you know, three out of every $10, but I don't quite know the scale of your business, but presumably a farm of your scale with the number of acres you've described to break even or keep maybe a small profit.

So we're already dealing with a lot of uncertainties, including the weather and the government. And now maybe the government has moved up that it's number one ahead of the weather. So it's just another wild card in the whole thought process. Are you talking to your fellow farmers, and do they feel as frustrated as you do? I would say probably at least. I mean, I'm not a regular coffee shop participant, so I don't have the benefit of all that knowledge that's shared there.

But I would say that it's about 99.9% universal. And what is 99.9% universal? Frustration. Yes, yes. As you're trying to make sense of why the president is doing this, I'm reminded of the fact that you did vote for President Trump. So as you're absorbing all the ways in which these tariffs and the response from China and then the response to the United States might all collectively complicate your business,

more than complicate, it could really hurt it, how are you thinking about your original decision to vote for President Trump? Well, I still would, given the facts I had at election day, I would still have voted for him. But I obviously at that day, I did not appreciate that it was going to be this dramatic. And, you know, maybe we're being over pessimistic, but I'm just looking at what I see today and I'm very concerned and hopefully things will play out a little better than what it looks like today and

try to hang on and let it get sorted out. Mr. Gold, it sounds like farming has always been a difficult business. Well, it has just because of the risk you have every crop year. You know, my wife would say it's a disease, genetic weakness. You're willing to live through thick and thin because you don't know any better or you like the fun of the fight or something. You're saying it's kind of in your blood. Yes. Whether that's good or bad, I'm not certain. But I guess it's not like you can walk out the door and go get a different job tomorrow

because it's an ongoing process from year to year. And you just enjoy the challenge. Maybe that's the best way to say it. And you hope that the weather and the government finally cooperate. Yes. Or at least don't get in your way. Well, I wish you the best and hope you do have a good crop. And thank you very much, Mr. Gold. Okay. Thank you. Gold. Okay. Thank you. Bye.

Bye. Soybeans, corn, and pork are three of the 106 American products included in the latest set of tariffs announced by China on Wednesday. They are specifically intended to hit U.S. farmers, who are a significant base of support for President Trump and a major supplier to Chinese supermarkets. The question now is whether the back and forth between the U.S. and China

will intensify to include more products before ultimately the two countries come together to negotiate new trade agreements, which was President Trump's goal in announcing the steel and aluminum tariffs that started this back in March. Here's what else you need to know today. All right. Hey, everyone. Thanks for joining today.

On Wednesday, Mark Zuckerberg held a conference call with reporters to discuss a statement released by Facebook that day, outlining changes the company is making to how it handles personal data, following the news that Cambridge Analytica, the political consulting firm hired by the Trump campaign, improperly accessed the information of tens of millions of Facebook users. We're an idealistic and optimistic company. And for the first decade, we really focused on all the good that messing people brings. But it's clear now that we didn't do enough. We didn't focus enough on preventing abuse

and thinking through how people could use these tools to do harm as well. As part of the statement, Facebook disclosed that most of its 2 billion users have likely had their public profiles harvested by outside companies without those users' permission, and revealed that up to 87 million people had their information shared with Cambridge Analytica, up from the 50 million users that Facebook had originally estimated. That means Cambridge Analytica had access to the user profiles of roughly a quarter of the U.S. population. We didn't take a broad enough view of what our responsibility is,

and that was a huge mistake. The call was a kind of preview of what Zuckerberg will tell Congress next week when he testifies before committees in both the House and the Senate. That's it for The Daily. I'm Michael Barbaro. See you tomorrow.