U.S. Farmers Hardest Hit in Trump Trade War With China


After months of brinkmanship, the Trump administration’s trade war with China is officially under way. The White House on Friday slapped $34 billion in tariffs on Chinese products; China responded immediately with $34 billion of its own. For much of the country, it’s a worrisome turn: a lengthy tit-for-tat would threaten to squelch an economy that has prospered so far under President Trump’s watch. But for America’s farmers, that possibility is already a harsh reality—the extension of a months-long struggle that already has them on the ropes.

China is targeting agriculture in its retaliatory tariffs for two reasons: because farm country is politically precious territory for the president, and because farmers, who operate with high costs, narrow profits, and harvest cycles that demand long-term economic projection, are deeply vulnerable to instability and price monkeying. And China, as the world’s largest agricultural importer, can monkey a lot. The corn market hit its yearlong high in late May, when Trump announced that China had agreed to a blockbuster trade deal that would include a huge increase in the purchase of American agriculture products, and that the trade war was thus on hold. But the White House reversed itself days later, and prices have been falling ever since. As China shifts its purchasing elsewhere, farmers in other countries are reveling in the unexpected windfall: export soybean prices have skyrocketed in Brazil in the last two months, even as they have cratered to a near decade low in the United States.

U.S. farmers, of course, were a key constituency for President Trump during the 2016 election, and they generally remain strong supporters today. Many echoed his contemptuous rhetoric about the state of America’s international trade deals before Trump took office, and even remain confident that Trump’s hard-nosed trade posturing will help the economy in the long run. But at the same time, a worrying truth is starting to hit home: These tariffs could put them out of business by the thousands, and the Trump administration doesn’t seem to have a plan to keep them afloat.

“The corn market’s a very fickle thing. It doesn’t take much to tip it over when it gets to a certain time of year,” Illinois farmer James McCune told THE WEEKLY STANDARD. “We have no idea what’s going on, and the market’s cratering like mad.”

McCune, who describes himself as an ex-Republican—“now I’m just a Trump supporter”—thinks Trump’s policies have helped to revitalize the economy of small-town America. But he’s also seen the impact falling prices have had on his own 5,500 acre farm: He estimates he’s lost $660,000 in revenue due to falling grain prices, enough to wipe out his grain profits entirely. And he sees himself as one of the lucky ones.

“I’m a pretty established guy—I’ve got a lot of s— working my way,” McCune said. “But it’s going to wipe a lot of these guys out. There’s going to be, like, a watershed moment, I’m telling you.”

By now, the Trump administration has apparently recognized the situation is becoming grim. Agriculture Secretary Sonny Perdue has been making the rounds in recent weeks, meeting with farm groups to assure them President Trump doesn’t intend to hang them out to dry.

“The president has told me to tell them that he’s not going to allow them to bear the brunt of these trade disruptions, and to make a plan for mitigation if we’re unable to resolve this trade issue,” Perdue said on CNBC last month. But when the host pressed him for details about the plan—“Which means what? The U.S. would buy those stocks at higher prices with taxpayer dollars?”—Perdue demurred. “The USDA has tools in our toolbox. We’re not disclosing all of those right now.” For farmers like McCune, that’s far from reassuring.

Plan or no plan, it’s hard to see what steps short of crop buybacks the Trump administration could take to reduce the impact of lost crop imports to the enormous Chinese market. U.S. farmers rely heavily on exports. There’s simply not enough people and livestock in America to eat up all the agriculture America produces—another reason China sees farmers as an economic pressure point.

“In this case, the Chinese are winning in this—what I call a food dispute, because China is the world’s largest soybean importer, accounting for about 103 million metric tons of 160 million metric tons total,” farm economist Dan Basse told THE WEEKLY STANDARD. “The Chinese, although they can’t go without—they’ll still probably take between 5 and 10 million metric tons of U.S. soybeans—can dramatically cut back, and that dramatic cut back means that the United States will find itself with an oversupply.”

In the long term, it’s this prospect of lost market share in China that’s most worrisome to farmers. Maybe they limp through another year of lousy markets, especially if the government steps in with additional subsidies. But if China makes a permanent decision to do their shopping elsewhere—or dramatically expands their domestic production of grains like soybeans—it could spell decades of disaster for U.S. growers. And so far, there’s no end in sight.

“Farmers just don’t know what to do,” Basse said. “They’re still sitting on a fair amount of old crop corn and soybeans. They got a big new crop in the field. They are seeing their cousins in South America or Russia gleeful over the opportunity to sell more of their product to China, and they feel fearful that once they lose these markets, it’s going to be very difficult to recapture it.”

In the meantime, farmers like McCune have settled into a sort of grim determination. If Donald Trump is determined to fight a trade war, everyone’s got to do what they can to help out. They just hadn’t realized it’d take this much out of them.

“It’s the best thing for the country, right? I mean, we send boys into battle, we’ve got guys 10,000 miles away that are 20 years old, carrying guns, hunting the Taliban, for the good of the country,” McCune said. “So yeah, with the farmers, most of them will say they’d like to do their part in trying to help things get right. But certainly it’s quite a financial burden, you know, more than we thought. It was a lot more fun four months ago—a lot more fun to talk about than it is to do.”





Source link

Articles You May Like

Emergency Physicians Provide Halloween Safety Tips For Parents
Graham’s Iranian Comment Not Going Over Well
Ga. GOP Gov. Candidate Brian Kemp Says Dem Opponent Stacey Abrams Wants ‘Illegals’ to Vote
We Need to Beef Up Our Military — And Then Some
Poll: Democrats Projected to Take House

Leave a Reply

Your email address will not be published. Required fields are marked *