Trump swings through the Midwest with a new tool to limit the political damage from his trade war

  • President Donald Trump is campaigning in the Midwest, where Republican candidates have been hurt in part by his trade policy.
  • In Minnesota, he touted his deal to revise the North American Free Trade Agreement, which could take pressure off the farmers and manufacturers damaged by the tariffs Trump has imposed on major trade partners.
  • He also heads to Kansas and Iowa, where several critical House races are taking place in November.
President Donald Trump speaks during a 'Make America Great Again' rally at Landers Center in Southaven, Mississippi, on October 2, 2018. 
Mandel Ngan | AFP | Getty Images
President Donald Trump speaks during a 'Make America Great Again' rally at Landers Center in Southaven, Mississippi, on October 2, 2018. 

President Donald Trump is swooping into Midwestern states to try to boost House Republican candidates hurt in part by his own trade policy.

He has a new tool to limit the political damage.

The president started a swing through key midterm states Thursday in Minnesota, which he will follow with rallies in Kansas on Saturday and Iowa on Tuesday. Facing backlash to his tariffs that brought targeted retaliation against farmers, Trump is touting the deal his administration struck this week to tweak, but largely keep intact, the North American Free Trade Agreement.

"NAFTA has been one of the great disasters of all time and now we have a great and fair deal. We have a fair deal," he said Thursday night in Rochester, Minnesota, within the state's battleground 1st Congressional District. The area has a strong agricultural presence, and the state overall plays host to four competitive House races in November as Republicans and Democrats battle for control of the chamber.

As the president slapped tariffs on key trading partners and threatened to scrap NAFTA this year, candidates in key races in Minnesota, Iowa and Kansas largely criticized the duties and defended the three-nation trade agreement. Securing a revised trade deal could reduce uncertainty for farmers and manufacturers as Trump's poor approval rating and protectionist policies threaten to help Democrats pick off multiple GOP-held House seats. The results hold huge stakes for Trump personally: a Democratic House would not only fight his policy goals, but also it would likely push to release his tax returns or launch more investigations into his administration.

Jim Hagedorn, a Republican who has opposed tariffs as he tries to win the Democratic-held 1st District, cheered the trade deal revision. It "will provide enhanced trade opportunities for our farmers and manufacturers," said Gregg Peppin, a spokesman for Hagedorn.

He is running against Democrat Dan Feehan, who has said the district's farmers are "suffering sizable losses" because of a "reckless trade war." Feehan's campaign did not respond to CNBC's request for comment.

Nonpartisan election analysts consider the contest to replace retiring Democratic Rep. Tim Walz a toss-up. The seat stretches from Minnesota's western to eastern border at the southern edge of the state.

While Trump can call the deal he dubbed the United States-Mexico-Canada Agreement a win, he still has one glaring trade problem: China. An escalating series of tariffs leveled by Washington and Beijing led to duties on American agricultural exports such as soybeans and pork.

Canada and Mexico also imposed retaliatory tariffs on the U.S. this year when the Trump administration levied duties on steel and aluminum imports from its two allies. The White House will not scrap those tariffs under the new agreement.

Still, retaining NAFTA takes at least some pressure off the politically important states of Minnesota, Kansas and Iowa after a tense, monthslong negotiating process. All three states sent more goods to Canada and Mexico than any other countries last year, according to U.S. Census data. Exports to Canada from Kansas jumped 40 percent from 2016 to 2017, while they rose 21 percent and 6 percent from Iowa and Minnesota, respectively.

Minnesota's largest newspaper, the Star Tribune, also called the deal a "sorely needed update" after months that "haven't been easy" for "Minnesota farmers and others who have borne the brunt of the tariffs." On Tuesday, the newspaper's editorial board wrote that the deal "should provide certainty and durability to continued free trade among the nations, along with protections for intellectual property and digital trade that the old agreement lacked."

"Still unresolved are the trade hostilities with China, one of Minnesota's largest trading partners and one that has resisted attempts to curb its freewheeling piracy of trade secrets and other infringements," the editorial board wrote. "Adding to the pain was the drama that accompanied Trump's attempts at deal making, complete with frequent insults and declarations to pull out of NAFTA altogether or, alternately, dump either Mexico or Canada, depending on the week."

In Kansas, candidates have also opposed Trump's tariff policy as they jockey to win in the competitive 2nd District that the president will visit Saturday. Nonpartisan handicappers consider the contest to succeed retiring GOP Rep. Lynn Jenkins a toss-up. The district in the eastern part of the state stretches from its southern to northern border and includes the city of Topeka.

Both the Democratic and Republican candidates for the seat have largely supported NAFTA and opposed the president's protectionist bent. Paul Davis, the Democratic candidate, told CNBC that the area's soybean farmers "are definitely feeling" the effects of price decreases caused by tariffs. The former Kansas House minority leader questions "the strategy of putting people in financial jeopardy when we don't really know what the end result is going to be."

Davis said he supports the continuation of NAFTA after Trump raised doubts about staying in the deal. He added that he does not worry about Trump's revised agreement boosting his GOP opponent, Steve Watkins, as "in many ways you're preserving the status quo and also averting what could have been a disastrous situation."

In a statement to CNBC, Watkins, an Army veteran, said that he "is not a big supporter of tariffs" and believes that ultimately "consumers pay for them and they burden our rural economies." He said early indications show that the NAFTA revision is a "positive step" and added that "the improvements related to expanding access to Canadian dairy markets appear to be promising for Kansas dairy farmers."

Rep. David Young, the endangered Republican in the Iowa district Trump will visit Tuesday, has also slammed the president's tariff policy. His Democratic challenger in Iowa's 3rd District, Cindy Axne, said in August that Iowa farmers "are getting crushed by Trump's reckless trade war" and "need trade policies that expand access to markets around the world."

The president reportedly has another economic action planned next week in Iowa to boost Republicans. He will follow through on a pledge to end a ban on higher ethanol gasoline blends — which would help the state's corn growers, according to Reuters.

Minnesota, Kansas and Iowa combined will have eight races this year that nonpartisan analysts consider crucial to the battle for House control. Those are the 1st, 2nd, 3rd and 8th Districts in Minnesota, the 2nd and 3rd Districts in Kansas and the 1st and 3rd Districts in Iowa. Republicans hold six of those seats, while Democrats represent two.

Of course, trade is only one issue that will determine the outcome of those races. Democratic candidates have focused primarily on health care as they try to flip the 23 GOP-held seats needed to take a House majority.

— Graphic by CNBC's John Schoen

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