- President Donald Trump will make two stops in Iowa, a state damaged by his trade war with China.
- The state's officials are cheering the president's decision not to follow through on tariffs on imports from Mexico, Iowa's second-largest export market.
- Iowa is a potentially competitive state in the 2020 election, as Trump won it after President Barack Obama carried it twice.
President Donald Trump heads to Iowa on Tuesday as he tries to limit the political damage from tariff crossfire that has scarred the U.S. heartland.
The Hawkeye State has — at least briefly — exhaled after the White House decided not to ramp up its trade conflict with Mexico, Iowa's second-largest export market. But ongoing damage in Iowa from the president's economic war with China has left Trump taking steps to shore up support in the state ahead of his 2020 reelection bid.
Trump will tour a renewable energy facility in Iowa on Tuesday afternoon before heading to a state GOP fundraiser. The events follow his administration's decision late last month to allow year-round sales of E15 fuel, a blend with a higher concentration of ethanol. Higher E15 sales will not only help ethanol producers but also boost demand for Iowa's corn.
Trump will have more he wants to promote in Iowa, a swing state that President Barack Obama won twice before Trump carried it in 2016. On Thursday, he signed a disaster relief bill that will give aid to areas of the state ravaged by flooding. (Trump's opposition to sending more relief money to Puerto Rico contributed to months of delays for the legislation.)
In late May, the Trump administration also announced a plan to distribute $16 billion in aid to farmers damaged by tariffs.
"Is the administration concerned about Iowa? I hope they are," said David Oman, a consultant who was chief of staff to two Republican governors of Iowa and co-chair of the state GOP.
Iowa is particularly vulnerable to shots in Trump's trade war. It not only ranks among the top U.S. producers of soybeans and pork — items hit by China's retaliatory tariffs — but also relies on free trade with Mexico and Canada. Damage to the state's farmers can ripple to manufacturers and consumer spending.
Trump's trip to Iowa on Tuesday shows an effort to contain the damage from his trade policy — especially as Democratic presidential candidates swarm the state ahead of its first-in-the-nation caucuses in February.
Trump won the state and its six electoral votes by about 9 percentage points in 2016. But his popularity in the state has fallen from its pre-inauguration highs. In May, 42% of registered voters in Iowa approved of the job Trump is doing, versus 54% who disapproved, according to a Morning Consult poll.
But there's little to suggest the president's core supporters abandoned him as the trade war widened. In March, a Des Moines Register poll found 81% of registered Iowa Republicans approve of the job Trump is doing — unchanged from a December 2018 survey.
Oman said Iowa farmers have been "surprisingly patient" as Trump tries to strike a trade deal with China. While he noted that Iowa has cheered the ethanol rules change, he called the aid package a "short-term fix at best" for farmers damaged by the tariffs.
"How much longer they will remain patient is hard to understand, hard to know," he said.
Only a few Democratic presidential candidates have tried to capitalize on Trump's trade policy. Most have not directly addressed tariffs in the state. They have instead focused on issues such as health care, infrastructure, the consolidation of big agriculture companies and addressing climate change to curb flooding in Iowa.
Former Rep. Beto O'Rourke — who represented a border area of Texas reliant on trade with Mexico — has criticized Trump's tariffs more often than most of his competitors. In a CNN column last month highlighting his talks with Iowa farmers, O'Rourke wrote that "China isn't paying the price for this reckless trade war. We are."
Former Vice President Joe Biden will also take shots at the president's tariff policy when he heads to Davenport, Iowa, on Tuesday.
"America's farmers have been crushed by [Trump's] tariff war with China. No one knows that better than Iowa," Biden will say, according to remarks prepared for delivery shared by his campaign. Also during the speech, he planned to call Trump an "existential threat" to the U.S.
As he prepared to leave for Iowa on Tuesday, Trump listed the reasons he would want to face Biden in 2020 — calling the former vice president a "loser" and mentally "weak." He also argued "the best thing that ever happened to the farmers is me," citing in part the aid package for farmers.
"We gave them ethanol at 15 which nobody was ever going to do, which Biden didn't do in eight years as vice president," he told reporters. "The farmers are my best friend. Nobody has treated the farmers better than Donald Trump."
Trump still could end the trade pain in the Midwest well before the November 2020 election. His administration hopes to strike a trade deal with China in the coming months. A deal could include increased agricultural purchases by Beijing.
But the president's trade policy could still create uncertainty for farmers in the future. In a CNBC interview Monday, Trump said "tariffs are a beautiful thing" — suggesting he could continue to deploy them. He believes duties on Chinese imports will force Beijing to make a trade deal.
The president has also left the door open to following through on his threatened 5% tariff on all Mexican imports if America's southern neighbor does not curb migration to the U.S. Iowa's Republican U.S. senators and governor had warned the duties would not only damage the Hawkeye State's economy, but also jeopardize passage of the United States-Mexico-Canada Agreement, the president's replacement of NAFTA.
Both Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and Sen. Joni Ernst, R-Iowa, had urged the president not to follow through with tariffs on Mexico. When Trump threatened the duties, Grassley went as far as to call them a misuse of presidential authority.
Trump's trade policy also has major political stakes for Ernst. She faces reelection next year as the GOP tries to hold its 53-47 majority in the Senate.
She appeared as relieved as anyone when Trump said he would not follow through with the tariffs on Mexico.
"Iowans are breathing a sigh of relief: Mexico has stepped up to help us address the humanitarian crisis at our southern border, and we won't feel the pinch from new tariffs with one of our biggest trading partners," Ernst said in a statement Friday.
Graphic by CNBC's John Schoen.
Correction: The Trump administration decided late last month to allow year-round sales of E15 fuel. An earlier version misstated the timing.