Trump's China deal, USMCA relieve Iowa farmers rocked by trade war

Canada, Mexico, China and Japan buy more than $62B of US agriculture

Iowa’s farmers were among the biggest casualties of the U.S.-China trade war, but President Trump's historic trade agreement has them confident of a comeback.

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The phase one deal comes on top of trade pacts his administration has negotiated with Canada, Mexico and Japan. Those four countries are the biggest buyers of U.S. agriculture, purchasing more than $62 billion of products in 2018.

"You're going to have to get bigger tractors and a hell of a lot more land," Trump said at a rally in Des Moines, Iowa, on Thursday, just days before the state's caucuses to choose a Democratic candidate for president.

A battleground state, Iowa gave its six electoral votes to Trump in 2016, and the state is important to his re-election bid this year. Its economy had been humming along before the outbreak of the trade war, growing at 5.4 percent and 4.2 percent in the first two quarters of 2018, before Trump imposed his first set of tariffs on Chinese goods on July 6.

China responded by putting its own levies on U.S. goods, including soybeans. The nation had bought $12.5 billion of U.S. soybeans the year before, and Iowa was the largest producer, growing 562 million bushels, or about 22 percent of nation's output.

The state's economy decelerated sharply as the tit-for-tat trade war escalated, growing just 1 percent in the third quarter before contracting 2 percent in the final three months of the year. It returned to growth in 2019, expanding at 2 percent, 1.1 percent and 1.3 percent in the first three quarters of the year.

Trump responded to the trade war's toll with two aid packages, totaling $28 billion, to help cushion the blow to U.S. farmers, whom he publicly praised.

"What President Trump has done had to be done," Roy Bardole, president of the Iowa Soybean Association, told FOX Business. "It was necessary. I understand that. But we paid the price financially for two years, and it's time we get that trade back."

China’s tariffs cost Iowa's soybean farmers nearly $891 million in revenue and the state’s pork industry lost as much as $955 million of sales, according to the Center of Agriculture and Rural Development at Iowa State University.

IOWA CAUCUSES: FARMERS EYE TRADE AS KEY ISSUE

Under the phase one agreement Trump signed with Vice Premier Liu He in January, though, Beijing will buy $40 billion to $50 billion of U.S. agriculture products, topping pre-trade war levels and giving Iowa a needed boost.

The China pact was followed by the ratification of the United States-Mexico-Canada Agreement, which opens new markets for American wheat, poultry and eggs, among other things. Trump has also inked a trade deal with Japan, which reduces or eliminates tariffs on $7.2 billion of U.S. agriculture.

Sen. Charles Grassley, R-Iowa, wrote in a Des Moines Register op-ed that the phase one deal is "welcome news" for Iowa farmers who have suffered through five years of low commodity prices. The USMCA "opens the barn" for farmers and workers all along the food supply chain, he added.

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FOX Business’ Hillary Vaughn contributed to this report.