By Lynda Bryant-Work
“As history has repeatedly proven, one trade tariff begets another, then another – until you’ve got a full-blown trade war. No one ever wins, and consumers always get screwed.” Mark McKinnon
Strong support from the agriculture sector helped elect President Donald Trump to the White House in 2016. But two years later, concerns about the trade war and trade disputes have many farmers backing away from Trump.
Tariffs are expected to raise the price of production for agriculture and make U.S. crops less competitive in China.
When it comes to the tariff battle, it has become tit for tat since Trump launched tariffs against other countries and they responded with their own. Among those goods are key agricultural exports, including corn, cotton and sorghum vital for the agriculture industry.
In Texas, farmers and livestock producers braced for the negative effects of the tariffs. The trade war plays havoc with their bottom line. Tens of billions of dollars of goods are traded between China and Texas each year.
Texas imported more than $42 billion in goods from the country in 2017, second only to Mexico. It exported about $16 billion in goods to China, placing it behind only Mexico and Canada.
Cotton is the state’s 10th largest export, with nearly half of the U.S. cotton exported to China from Texas. China is also the state’s largest international soy customer; and corn exports to China are worth about $157 million, making it the 13th largest exporter of the crop in the country.
Farmers report that even talk of tariffs causes prices to fluctuate and hurt producers, with prices decreasing, but actual enactment of tariffs exacerbates the problem. One Texas cotton farmer noted that the threat of tariffs caused shipping companies to be more hesitant about buying his crop.
According to Gene Hall, spokesperson for Texas Farm Bureau, pointing out a 50 percent decline in agricultural income since 2013, the tariffs will hurt farmers.
“You couldn’t pick a worse time for agriculture to be in a trade dispute,” said Hall.
When looking at the U. S. Department of Agriculture’s net farm incomes estimates since 1929 in inflation-adjusted dollars (2018), the $48.5 billion estimate of trade war net farm income puts into perspective how dire the situation could become.
At $48.5 billion, conditions would be in line with those during the Farm Financial Crisis of the 1980s. Specifically, farm income would’ve been the lowest since 1983 ($30.7 billion) and 1980 ($41.9 billion). In 90 years of data, $48.5 billion would be the seventh lowest value.
In short, the trade war can push net farm income, and the broader farm economy, to crisis levels.
But it isn’t just the crop tariffs that hurt farmers. Other tariffs will also make agricultural equipment more expensive, as well as the cost of living and inflation associated with tariff wars.
The story is the same across the agricultural sectors throughout the United States and the concerns run deep and is reflected in less and less support for Trump, particularly in a trade war.
The Farm Futures survey that was conducted July 20 to Aug. 2 indicates a decline in support for Trump and shows 60 percent of farmers might still vote for Trump if the election were held today – down from the 75 percent support he received from growers.
The survey showed 24 percent said they would not vote for Trump again; 17 percent were unsure.
Even when growers offered up high marks for Trump in other areas, trade is a major sticking point. Only 8 percent of all growers voiced support for the president’s statement that “trade wars are good and easy to win,” with 40 percent believing “President Trump’s actions on trade have done permanent damage to agriculture.”
Agriculture is divided on many of the same partisan lines that may be front and center in the mid-term elections. Concerning immigration, there is a split among the voters. Voters also see the budget deficit and economy as a leading issue.
Overall, trade has replaced the issues of the Supreme Court nominees and terrorism, and foreign trade is uppermost in the minds of many farmers.
While the USDA promised assistance in a farm bailout to offset some of the estimated $12 billion in losses due to the trade war, anxiety about the financial pressures appear to be growing. And it is one issue that doesn’t divide Republican and Democrat farmers surveyed. At least half said they worried about being able to pay back farm debt.
Younger farmers carry a high debt load and are under the most strain, while older farmers born after 1945 tend to borrow less and are better able to withstand market volatility. Millennial farmers born after 1980 and the older sector have matching erosions on their support for the president.
Farmers are generally reliable Republican voters on average at 75 percent, with about 10 percent saying they are Democrats or leaning toward that party. The other 15 percent claim to be independent.
The message is clear is that most farmers are not happy with the tariffs and remain critical in the face of damage done to commodity prices and market even after the U. S. Department of Agriculture announced the $12 billion three-part plan to bail out farmers. The bailout would include soybeans, sorghum, corn, wheat, cotton, dairy and hogs.
Farmers say they would rather see the trade war settled and get free trade flowing again.
As one farmer who grows corn and soybeans and raises pigs in Minnesota said, “I don’t want free money. I don’t want bailouts. I want trade. Trade is what works.”
With mounting concerns over the trade war and farm income, producers remain extremely wary as China and other countries continue to retaliate. And this is bad news for the farming community.