America’s Midwest is experiencing the worst flooding since the Great Food of 1993. “Many farmers across wide swaths of the Midwest have rarely seen days dry enough to work, leading to what agricultural experts are calling a historically delayed planting season that could exacerbate the economic and personal anxieties brought on by a multiyear slump in farm prices and the Trump administration’s trade war with China, the world’s largest soybean buyer.” Extreme weather is pummeling the Midwest, and farmers are in deep trouble.
UPDATE: After a biblical spring, this is the week that could break the Corn Belt:
Through all of April and all of May, wave after wave of rain hit the nation right in the breadbasket, with April capping the wettest 12 months on record for the continental United States. The past 60 days, in particular, have coincided with planting season in much of the country.
It should have been prime planting season. In most years, almost every corn seed would be in the ground by now.
This is not like most years. As the calendar ticks toward the point of no return, new data released Monday shows farmers have planted 67 percent of the acres they had planned to put in corn. In key states such as Illinois (45 percent) and Indiana (31 percent), it is even lower.
Surging floodwaters and soaking rains — combined with President Trump’s trade war with China — are making it an exceptionally difficult year for farmers facing risky choices about what crops to plant, or whether to plant at all. Floods and Trump’s Trade War Create an Uncertain Year for Farmers:
“It’s probably the most complicated decision season I’ve ever seen,” said Wallace Tyner, a professor of agricultural economics at Purdue University.
So far this year, farmers have planted only two-thirds of the corn they would have been expected to by now, based on the previous five years. And with their fields still wet or underwater, the window for planting corn is closing. The resulting rise in commodities prices could eventually mean higher food costs in the nation’s grocery stores.
Yet the standard decisions facing most grain farmers are already trickier than usual this year, as a result of President Trump’s escalating trade dispute with China, one of the most important foreign markets for agricultural products from the American Midwest.
Earlier in May, Mr. Trump imposed a 25 percent tariff on $200 billion of Chinese imports and threatened to do the same for another $300 billion. In response, China has cut back on its imports of agricultural goods from the United States.
To help farmers, the Trump administration has offered assistance payments designed to offset lost income from the trade war. However, those payments will be calculated on how many acres of crops a farmer plants this year — which means any cutbacks in planting due to floods or rain will hurt farmers even more, by reducing eligibility for the government assistance.
And there is yet another complicating factor. Often, farmers who aren’t able to plant corn choose soybeans instead, which can be planted later in the year. But that strategy might not make sense this time around, given China’s retreat from buying America’s soybeans.
The American Farm Bureau Federation has urged the Department of Agriculture to change the way it sets the assistance payments, according to John Newton, the group’s chief economist. The bureau wants acres that can’t be planted to count toward a farmer’s eligibility for federal assistance.
Even if the administration changes the policy determining how farmers get assistance payments, the floods and rain have caused other problems that will continue to ricochet through the economy.
The most obvious effect will be on prices. Corn futures have jumped since mid-May, increasing by about one-quarter. Those prices will lead to higher costs for some foods.
“Where it would be felt most immediately is through milk, meat and eggs,” said Scott Irwin, a professor of agricultural marketing at the University of Illinois.
* * *
Another unknown is the effect of the flooding on grains that have already been harvested and are being stored by farmers. If water gets into those storage bins, those crops can no longer be used for food, animal feed or even ethanol, Mr. Newton said. It’s still too soon to know the extent of damage to stored crops.
The greatest concern may be what happens if the Midwest suffers more such severe floods and rains in future growing seasons. Scientists say the increase in average surface and air temperatures over time is likely to lead to increasingly extreme precipitation patterns.
And now Donald Trump has doubled-down on his trade wars by focusing his ire on Mexico. Bloomberg reports, Trump’s Newest Tariff Threat Ripples Across 2020 Battlegrounds:
The economic damage of U.S. tariffs on Mexican goods would tear through battleground states that President Donald Trump needs to win re-election, hurting the auto industry in Michigan and Ohio, dairy farmers in Wisconsin and grain and hog farmers in Iowa and North Carolina.
In a pair of tweets Thursday night, Trump warned he’d impose tariffs on Mexico starting at 5% on June 10 and ramping up in increments to 25% in October unless Mexico stops immigrants from entering the U.S. illegally.
Industry advocates, including manufacturers and various agricultural commodity groups, issued dire warnings about the fallout from tariffs. The powerful U.S. Chamber of Commerce said it’s considering a legal challenge.
Trump’s pivot to using tariffs in a bid to fulfill his campaign pledge to end the flow of undocumented immigrants to the U.S. could back-fire if it dings U.S. economic growth.
* * *
Jay Timmons, president and chief executive officer of the National Association of Manufacturers, called the threats “a Molotov cocktail of policy” that would have “devastating consequences on manufacturers in America.”
A top Mexican official said the country won’t retaliate before discussing the matter with the U.S. Still, the potential tariffs, “if turned into reality, would be extremely serious,” said Jesus Seade, the country’s undersecretary of foreign relations for North America.
Retaliation by Mexico is virtually certain to strike Trump’s political base in rural America. Farmers are already under strain from ongoing trade wars, low commodity prices, and natural disasters including spring flooding across the Midwest.
Agricultural groups had been relieved just two weeks earlier when Trump moved to end a trade dispute with Mexico by ending tariffs on steel and aluminum imports from the country. Now, they face the prospect Mexico will resume punitive duties on U.S. agricultural goods.
Chris Kolstad, chairman of U.S. Wheat Associates, a grower-financed group that promotes exports, and a wheat farmer from Ledger, Montana, compared the potential fallout to “struggling to survive a flood then getting hit by a tornado.”
Trade Deal
Farm groups fear a new trade dispute will hinder ratification of the U.S.-Mexico-Canada Agreement — intended to replace the North American Free Trade Agreement — which they consider crucial to maintaining trade with the nation’s two largest agricultural export markets.
House Agriculture Committee Chairman Collin Peterson of Minnesota said in a radio interview Friday that a trade fight with Mexico “is really going to throw a wrench into” efforts to pass USMCA.
Dairy and pork producers will be in cross-hairs if Trump resumes a trade fight with Mexico, which hit both industries with punitive tariffs in the most recent trade dispute. [Mexico] is also the largest export market for U.S. corn and wheat, and the second-largest for soybeans, behind China.
Agricultural and industrial regions played an important role in Trump’s electoral map in 2016. He won an Electoral College majority and the presidency based on a combined margin of fewer than 80,000 votes in three states: Wisconsin, Michigan and Pennsylvania.
The largest agricultural sector in each of those three states is dairy. Mexico is “our number one market,” Tom Vilsack, president and CEO of the U.S. Dairy Export Council and a former U.S. Secretary of Agriculture, said in an email.
Iowa, which voted for Trump in 2016 after supporting Democrat Barack Obama in 2008 and 2012, is the largest U.S. producer of hogs and of corn. North Carolina, another electoral battleground, is the nation’s second-largest hog producer.
Retaliation Fears
David Herring, president of the National Pork Producers Council and a hog farmer from Lillington, North Carolina, urged Trump to reconsider.
“American pork producers cannot afford retaliatory tariffs from its largest export market, tariffs which Mexico will surely implement,” Herring said in an emailed statement.
Trade disputes with Mexico and China already have cost U.S. pork producers $2.5 billion over the past year, Herring said. The two rounds of financial aid the Trump administration has announced for farmers “provide only partial relief to the damage trade retaliation has exacted,” he said.
Republicans in Congress are alarmed by the pending electoral disaster that Trump’s trade wars are setting up. GOP lawmakers discuss vote to block Trump’s new tariffs on Mexico, in what would be a dramatic act of defiance:
Congressional Republicans have begun discussing whether they may have to vote to block President Trump’s planned new tariffs on Mexico, potentially igniting a second standoff this year over Trump’s use of executive powers to circumvent Congress, people familiar with the talks said.
The vote, which would be the GOP’s most dramatic act of defiance since Trump took office, could also have the effect of blocking billions of dollars in border wall funding that the president had announced in February when he declared a national emergency at the southern border, said the people, who spoke on the condition of anonymity because the talks are private.
Trump’s plans to impose tariffs on Mexico — with which the United States has a free-trade agreement — rely on the president’s declaration of a national emergency at the border. But the law gives Congress the right to override the national emergency determination by passing a resolution of disapproval.
Congress passed such a resolution in March after Trump reallocated the border wall funds, but he vetoed it. Now, as frustration on Capitol Hill grows over Trump’s latest tariff threat, a second vote could potentially command a veto-proof majority to nullify the national emergency, which in turn could undercut both the border-wall effort and the new tariffs.
Republican lawmakers aren’t eager to be drawn into a conflict with the president. But some feel they might have to take action following a growing consensus within the GOP that these new tariffs would amount to tax increases on American businesses and consumers — something that would represent a profound breach of party orthodoxy.
* * *
On Monday, lawmakers from both parties, including several top Republicans, warned that Trump was risking the destruction of a pending trade deal with Mexico and Canada by preparing to slap import penalties on Mexican goods.
The lawmakers urged Trump to abandon the planned tariffs. Otherwise, they said, the pending trade deal known as the United States-Mexico-Canada Agreement, or USMCA, will probably fail.
“I think this calls into question our ability to pass the USMCA, much less get it passed by Canada and by Mexico,” Sen. John Cornyn (R-Tex.) told reporters Monday. “And so we need to put our heads together and try to come up with a solution.”
If Congress does not approve USMCA — Trump’s proposed successor to the 1994 North American Free Trade Agreement — he could face an embarrassing setback ahead of the 2020 elections.
Trump responded to the threat from his own GOP caucus today: “I am the king, and you will obey!” Mexico Will Face Tariffs Next Week, Trump Vows:
President Trump on Tuesday said he plans to move forward with imposing tariffs on Mexican imports next week as part of his effort to stem the flow of migrants crossing the southern border, telling reporters at a news conference with British Prime Minister Theresa May that Republican senators would be “foolish” if they try to stop him.
“I think it’s more likely that the tariffs go on, and we’ll probably be talking during the time that the tariffs are on, and they’re going to be paid,” Mr. Trump said. When asked about Senate Republicans discussing ways to block the tariffs, Mr. Trump said, “I don’t think they will do that.”
He said, “I think if they do, it’s foolish.”
Senate Republicans have responded in kind. Senate Republicans Warn White House Against Mexico Tariffs:
Republican senators sent the White House a sharp message on Tuesday, warning that they were opposed to President Trump’s plans to impose tariffs on Mexican imports, just hours after the president said lawmakers would be “foolish” to try to stop him.
Mr. Trump’s latest threat — five percent tariffs on all goods imported from Mexico, rising to as high as 25 percent until the Mexican government stems the flow of migrants — has riled Republican senators who fear its impact on the economy and their home states. They emerged from a closed-door lunch in the Capitol angered by the briefing they received from a deputy White House counsel, Patrick F. Philbin, and Assistant Attorney General Steven A. Engel on the legal basis for imposing new tariffs by declaring a national emergency.
“I want you to take a message back” to the White House, Senator Ted Cruz, Republican of Texas, told the attorneys, according to people familiar with the meeting. “You didn’t hear a single yes” from the Republican conference. He called the proposed tariffs a $30 billion tax hike on Texans.
Senator Ron Johnson, Republican of Wisconsin, said he warned the lawyers that the Senate could muster an overwhelming majority to beat back the tariffs, even if Mr. Trump were to veto a resolution disapproving them. Republicans may be broadly supportive of Mr. Trump’s push to build a wall and secure the border, he said, but they are almost uniformly opposed to the imposition of tariffs on Mexico.
“The White House should be concerned about what that vote would result in, because Republicans really don’t like taxing American consumers and businesses,” Mr. Johnson said.
* * *
Any vote to disapprove the tariffs would almost certainly face a presidential veto, meaning that both the House and Senate would have to muster two-thirds majorities to beat Mr. Trump. Opponents would use the same motion of disapproval that they tried to use to block the president from grabbing federal money for a border wall that was not appropriated for that purpose. That motion did pass Congress with significant Republican support, but not enough to overcome Mr. Trump’s veto.
Mr. Johnson warned White House officials that they should not count on a veto override vote going the same way.
It appears that Trump’s trade war has morphed into a civil war within his own GOP caucus.