The top Republican on the Senate Finance Committee, Idaho Sen. Mike Crapo, warned leaders of the nation’s farmer cooperatives Thursday that U.S. inaction on trade agreements is benefiting China and that both former President Donald Trump and Vice President Kamala Harris pose problems for trade policy.
“We need folks lobbying whoever's the next president to encourage them to recognize how critical [trade] is not just for economics, but for our national security,” said Crapo, speaking at the National Council of Farmer Cooperatives’ annual Washington conference.
The Finance Committee, one of the most powerful panels in Congress, has jurisdiction over trade and tax policy as well as Social Security and Medicare.
Crapo noted that the Biden administration has refused to try to negotiate new trade agreements, and he said Trump “has his tariff ideas,” a reference to Trump’s proposals to impose across-the-board duties on U.S. imports and to increase tariffs on China.
Crapo said several Asian countries, along with other nations, are eager to negotiate market-access agreements with the United States and that failing to do so is allowing China to increase its economic influence.
“The more nations that we let fall into China's orbit economically, the more dangerous our life becomes here in the United States, leaving aside the economic benefits that we are going to lose,” Crapo said. “And so, this is really a big deal, and the United States needs to get much more engaged in trade.”
Crapo suggested the policy differences between Trump and Harris were much clearer on tax policy. Key provisions of the 2017 Tax Cuts and Jobs Act expire at the end of 2025, including reduced tax rates, the Section 199A deduction for pass-through business income and a doubling of the estate tax exemption.
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If Republicans gain control of both the White House and Congress, they will use the budget reconciliation process to extend all of the TCJA provisions and likely make another cut to the corporate tax rate, which is now 21%, along with some changes to the Section 199A deduction that would benefit small businesses.
Democrats would likely support an extension of the Section 199A deduction but would probably try to reduce its benefit to high-income businesses, Crapo said.
The Harris campaign has reportedly pledged not to raise taxes on anyone making less than $400,000 a year. Democrats are instead expected to try to raise taxes on wealthy individuals and corporations.
“We’re either going to have a fight over huge tax increases for the larger financial entities … or we’re going to have a big fight over extending most of the TCJA and then tuning it up to get it a little bit better,” Crapo said of difference between the Democratic and GOP approaches to the TCJA expiration.
The Section 199A deduction benefits farmer co-ops and their members. Based on a survey of NCFC members, most of whom were national or regional, the deduction was worth more than $2 billion in 2023, 95% of which was passed to members of the co-ops, the group said. Most small, local co-ops were not included in the survey, so the value of the deduction is likely larger.
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