Tariff Man’s tariffs are devastating America’s farmers (Updated)


The failure of the U.S.-China trade talks was another blow for American farmers, who just a few weeks ago thought a trade deal was imminent. They now begin another growing season with uncertainty about who will buy their crops and whether they can break even. Frustration Mounts Among Farmers as China Trade Talks Break Down:

The breakdown was another blow for American farmers, who just a few weeks ago thought a trade deal was imminent. They now begin another growing season with uncertainty about who will buy their crops and whether they can break even.

Though Mr. Trump pledged Friday to help farmers — part of the coalition that put him in office — there were signs of frustration. They raised questions about his negotiating tactics. They said they were worried about what would come next given an already-struggling agricultural economy.

UPDATE: Trump’s trade war has political implications for Trump ahead of his 2020 reelection bid. He risks angering farmers, a key voting bloc damaged by low crop prices caused in part by the trade war. Trump defends his latest China tariffs with an eye on the 2020 election: Trump would effectively raise revenue from U.S. consumers and redistribute it to farmers. Doing so could undercut a core strategy the president’s campaign has deployed so far in the 2020 race: accusing Democrats of advocating for socialism. “We’re all socialists now.”

“Many people are just torn because people want to support the president of the United States,” said Nancy Johnson, the executive director of the North Dakota Soybean Growers Association. “But it’s very stressful to be in the middle of these very challenging negotiations. Because you’re the person who can’t take hope to the banker to get his loans for operating.”

Mr. Trump is generally popular in the rural Midwest. He carried all but two Midwestern states in 2016, won more than 90 percent of the vote in some agrarian counties and has been praised for rolling back environmental regulations. But Mr. Trump’s propensity for imposing tariffs has clashed with the free-trade instincts of the region’s farmers, who have watched lucrative overseas markets for soybeans and other crops shrivel. For some Midwestern Republicans in Congress, the use of tariffs has been a rare point of disagreement with President Trump.

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Mr. Trump, who has accused China and other countries of taking advantage of the United States on trade, said he would help farmers weather the trade uncertainty. On Twitter, Mr. Trump suggested that the United States government could buy billions of dollars of agricultural products from farmers. Sonny Perdue, the agriculture secretary, said separately that Mr. Trump had directed his department to work on a plan to help farmers.

In Shelby County, Ind., Phil Ramsey said he appreciated the president’s reasons for revisiting trade deals, but said the ailing farm economy had been brutal in deeply personal ways. He said he was going without health insurance to save money. He said he has delayed some equipment purchases.

“I was very patient a year ago,” said Mr. Ramsey, who grows corn, soybeans and wheat. “I’ve gone from being very patient to being very anxious.”

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The lack of a trade deal was especially painful in Nebraska, which saw widespread damage from flooding in March. The damage there, as well as in parts of Missouri and Iowa, has turned cropland into debris fields and forced some farmers to evaluate whether they could continue making a living off the land.

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“It’s a little bit of piling on when you have so many different things that you’re struggling against,” said Steve Nelson, the president of the Nebraska Farm Bureau. “Obviously, the trade issue is one of those. The weather is one of those.”

Lance Atwater, 29, who farms corn and soybeans near Ayr, Neb., escaped the worst of the flooding but said that he has seen prices for some of his crops plunge. Mr. Atwater, a Republican who voted for Mr. Trump, said he was eager for a trade deal but taking a wait-and-see approach on the president’s policies.

“He’s claimed that he’ll get these trade deals worked out and that it will be a better deal,” Mr. Atwater said on Friday as he hauled grain. “That’s what we’re wanting to see — see those results.”

Jerry Mohr, 66, a fourth-generation farmer who grows corn and soybeans near Eldridge, Iowa, said he was growing frustrated.

“I admire the president for wanting to make change,” said Mr. Mohr, a Republican who voted for Mr. Trump, “but now we need to perform.”

“If the president comes through on what he says he was going to do, it would be hard for him to lose,” Mr. Mohr said. “If he doesn’t, it’s going to be hard for him to win.”

Farmers, like baseball fans, are eternally optimistic — next season will be better — and that is their weakness. It takes losing everything before they are finally willing to admit to themselves the truth, that it’s over. It is time for farm country to wake the hell up and to reject the GOP and the personality cult of Donald Trump — they are killing farmers’ way of life.

A paper published in March by economists Pinelopi Goldberg, the World Bank’s chief economist, Pablo Fajgelbaum of UCLA, Patrick Kennedy of the University of California, Berkeley, and Amit Khandelwal of Columbia Business School also found that consumers and U.S. companies were paying most of the costs of Trump’s tariffs.

It also went a step further: After factoring in the retaliation by other countries, it concluded the main victims of Trump’s trade wars had been farmers and blue-collar workers in areas that supported Trump in the 2016 election.

Workers in very Republican counties bore the brunt of the costs of the trade war, in part because retaliations disproportionately targeted agricultural sectors,” the authors wrote.

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Trump’s trade war: Where American workers are hit hardest:

The latest escalation in President Trump’s trade war will expose to tariffs roughly 11 million U.S. workers who are employed in industries that produce targeted goods.

Why it matters: Industries affected by the brinksmanship are mostly concentrated in rural, deeply red, already-struggling parts of the country, with political consequences for Trump and Republicans in 2020.

Explanation of the map: The map tracks the geographical impact of both current and threatened retaliation. The darker a county, the higher the concentration of affected industries there.

Driving the news: U.S. tariffs on $200 billion in Chinese imports are about to rise from 10% to 25% — an escalation of the trade war that could hurt major importers and trigger even more painful retaliation by China.

Employment in rural and low-population counties can be exceptionally vulnerable to gyrations in the global economy, said Mark Muro, a senior fellow at the Brookings Institution. “In a small county, a single meat packing establishment can provide hundreds of jobs and make up a large share of that county’s total employment,” he told Axios in September. A prior report by Muro and others at Brookings inspired this analysis.

Methodology: We calculated the concentration of industries in each county compared with the national average. To get there, we gathered lists of goods facing tariffs from Canada, China, Mexico, and the European Union. The data is from the U.S. Chamber of Commerce and the Bureau of Labor Statistics’ Quarterly Census of Employment Wages.

As economist Paul Krugman explains, Trump is terrible for rural America:

Rural America is a key part of Donald Trump’s base. In fact, rural areas are the only parts of the country in which Trump has a net positive approval rating. But they’re also the biggest losers under his policies.

What, after all, is Trumpism? In 2016 Trump pretended to be a different kind of Republican, but in practice almost all of his economic agenda has been G.O.P. standard: big tax cuts for corporations and the rich while hacking away at the social safety net. The one big break from orthodoxy has been his protectionism, his eagerness to start trade wars.

And all of these policies disproportionately hurt farm country.

The Trump tax cut largely passes farmers by, because they aren’t corporations and few of them are rich. One of the studies by Agriculture Department economists that raised Trumpian ire showed that to the extent that farmers saw tax reductions, most of the benefits went to the richest 10 percent, while poor farmers actually saw a slight tax increase.

At the same time, the assault on the safety net is especially harmful to rural America, which relies heavily on safety-net programs. Of the 100 counties with the highest percentage of their population receiving food stamps, 85 are rural, and most of the rest are in small metropolitan areas. The expansion of Medicaid under the Affordable Care Act, which Trump keeps trying to kill, had its biggest positive impact on rural areas.

And these programs are crucial to rural Americans even if they don’t personally receive government aid. Safety-net programs bring purchasing power, which helps create rural jobs. Medicaid is also a key factor keeping rural hospitals alive; without it, access to health care would be severely curtailed for rural Americans in general.

What about protectionism? The U.S. farm sector is hugely dependent on access to world markets, much more so than the economy as a whole. American soybean growers export half of what they produce; wheat farmers export 46 percent of their crop. China, in particular, has become a key market for U.S. farm products. That’s why Trump’s recent rage-tweeting over trade, which raised the prospect of an expanded trade war, sent grain markets to a 42-year low.

It’s important to realize, by the way, that the threat to farmers isn’t just about possible foreign retaliation to Trump’s tariffs. One fundamental principle in international economics is that in the long run, taxes on imports end up being taxes on exports as well, usually because they lead to a higher dollar. If the world descends into trade war, U.S. imports and exports will both shrink — and farmers, among our most important exporters, will be the biggest losers.

Why, then, do rural areas support Trump? A lot of it has to do with cultural factors. In particular, rural voters are far more hostile to immigrants than urban voters — especially in communities where there are few immigrants to be found. Lack of familiarity apparently breeds contempt.

Rural voters also feel disrespected by coastal elites, and Trump has managed to channel their anger. No doubt many rural voters, if they happened to read this column, would react with rage, not at Trump, but at me: “So you think we’re stupid!”

But support for Trump might nonetheless start to crack if rural voters realized how much they are being hurt by his policies. What’s a Trumpist to do?

One answer is to repeat zombie lies. A few weeks ago Trump told a cheering rally that his cuts in the estate tax have helped farmers. This claim is, however, totally false; PolitiFact rated it “pants on fire.” The reality is that in 2017 only about 80 farms and closely held businesses — that’s right, 80 — paid any estate tax at all. Tales of family farms broken up to pay estate tax are pure fiction.

Another answer is to try to suppress the truth. Hence the persecution of Agriculture Department economists who were just trying to do their jobs.

The thing is, the assault on truth will have consequences that go beyond politics. Agriculture’s Economic Research Service isn’t supposed to be a cheering section for whoever is in power. As its mission statement says, its role is to conduct “high-quality, objective economic research to inform and enhance public and private decision making.” And that’s not an idle boast: Along with the Federal Reserve, the research service is a prime example of how good economics can serve clear practical purposes.

Now, however, the service’s ability to do its job is being rapidly degraded, because the Trump administration doesn’t believe in fact-based policy. Basically, it doesn’t believe in facts, period. Everything is political.

And who will pay the price for this degradation? Rural Americans. Trump’s biggest supporters are his biggest victims.

As I’ve said before, Democrats running for president and for federal offices in farm country need to devise an agriculture commodity-trade policy that allows farmers to sell their product at prices high enough for their operations to be financially viable and to turn a small profit, and no longer need to be on federal farm subsidy assistance just to survive. If Democrats can offer a solution to the farm economy, they can win back those farm states that Republicans have taken for granted.

UPDATE: The president has told advisers and top allies “that he has no intention of pulling back on his escalating trade war with China, arguing that clashing with Beijing is highly popular with his political base and will help him win reelection in 2020 regardless of any immediate economic pain,” according to the Washington Post. Trump believes China tariffs will help him win reelection.

So Trump is good with tanking the economy and bankrupting America’s farmers. So are his sycophant cult followers in Congress. GOP Sen. Tom Cotton says farmers’ tariff ‘sacrifices’ are nothing compared to the military’s:

Sure, Americans — particularly American farmers — will bear the economic brunt of Trump’s decision to increase tariffs and China’s own retaliatory tariffs on $60 billion worth of imported U.S. goods. But in the grand scheme of things, Cotton says, it’s a small price to pay, especially compared to the sacrifices that the men and women in the U.S. military make.

So boo-hoo farmers. Too bad for you! Losing your farm that has been in your family for generations and is the only way of life you have ever known is but a small price to pay for the greater glorification of our “Dear Leader,” Donald Trump. Republicans have completely lost their minds.

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AZ BlueMeanie
The Blue Meanie is an Arizona citizen who wishes, for professional reasons, to remain anonymous when blogging about politics. Armed with a deep knowledge of the law, politics and public policy, as well as pen filled with all the colors stolen from Pepperland, the Blue Meanie’s mission is to pursue and prosecute the hypocrites, liars, and fools of politics and the media – which, in practical terms, is nearly all of them. Don’t even try to unmask him or he’ll seal you in a music-proof bubble and rendition you to Pepperland for a good face-stomping. Read blog posts by the infamous and prolific AZ Blue Meanie here.