Farmers Fear More Pain From Trump's Trade War
'He's out there with his wrecking ball just throwing tariffs around,' says Barb Kalbach, a fourth-generation corn and soybean farmer in Dexter, Iowa.
Trump's 25% tariffs on goods from Canada and Mexico went into effect Tuesday, and the President doubled the levy on products from China to 20%. China retaliated with taxes of up to 15% on U.S. farm imports, while both Canada and Mexico announced retaliatory tariffs of their own. Canada's 25% tariffs on $30 billion of U.S. products affect poultry, meat, dairy, wheat, and other food products.
Farmers know from experience that these retaliatory tariffs are going to hurt them. When Trump launched a trade war against China in 2018, Beijing responded with tariffs aimed at the U.S. farm industry. Exports fell as Chinese buyers looked to places like Brazil for soybeans, reducing the market share of American farmers. Farmers were hit so hard that the Trump Administration ended up spending $23 billion to make them whole.
Read More: Here's Where China's Retaliatory Tariffs Could Hit Hardest.
'Agriculture took the brunt of retaliatory tariffs by China last time, and certainly agriculture is going to be the main target of today's retaliatory strikes,' says Marc Busch, a professor at Georgetown's School of Foreign Service who studies trade. This time, it's not just China retaliating, but also Mexico and Canada, two of America's top trade partners. 'The expectation among ag stakeholders is that it will only be worse this time,' Busch says.
Kalbach, the Iowa farmer, fears the newest tariffs will only make it harder to export her products. 'This is just going to take parts of our markets away,' she says.
In the last trade war, around 80% of the money the U.S. government took in from tariffs on Chinese imports went back to paying farmers who were hurt by retaliatory tariffs, Busch says. Such payments keep farms afloat, but what will really boost the agriculture industry is to find new markets, says Clark Packard, a research fellow at the Cato Institute. 'It's a question of whether we want welfare payments or whether we want to actually make sales,' Packard says. 'We are getting back into this business of doling out more and more payments to the agricultural industry.'
Read More: How Trump's Tariffs Could Affect U.S. Consumers.
According to the American Farm Bureau Federation, U.S. farmers have lost money on 'almost every major crop planted' in the last three years. 'Adding even more costs and reducing markets for American agricultural goods,' federation president Zippy Duvall said in a statement, 'could create an economic burden some farmers may not be able to bear.'
Trump addressed such concerns in a post on Truth Social, encouraging farmers to sell more products within the U.S. 'To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold inside the United States. Tariffs will go on external product on April 2nd. Have fun!' he wrote Tuesday.
But farmers say that limiting sales to domestic markets would hinder their businesses and lower prices. The U.S. exported $83 billion in agricultural products to Canada, China, and Mexico last year, according to the farm bureau.
'We're really good at raising healthy, safe, and cost-effective food to the point that we produce way more than this country needs,' says Chad Franke, the president of Rocky Mountain Farmers' Union, which represents 14,000 farmers across Colorado, Wyoming, and Mexico. 'To say that we're just going to sell it domestically is like saying you should put 20 gallons of gas in your 15 gallon gas tank.'
Take the dairy industry. About 20% of U.S. milk production is exported annually, with about 40% of that going to Canada, Mexico, and China, according to Chuck Nicholson, an associate professor at the University of Wisconsin-Madison. If the domestic dairy industry gets only a little more milk than traders were expecting, prices drop as a result, Nicholson says. So if the dairy industry started trying to sell that 20% domestically instead of exporting it, prices would plummet, making it difficult for farmers to continue to operate.
Already, Trump Administration policies are giving dairy farmers a headache, Nicholson adds, from immigration crackdowns to potential cuts to government programs such as food stamps, which contribute to demand for domestic dairy products. Farmers are uncertain about what markets will still want farmers' products, whether the federal staffers they work with on a daily basis will still be there the next day, how much farm equipment and gas are going to cost, and how much they'll be able to sell their crops for.
'Farmers and ranchers already have enough uncertainty in their daily lives,' says Franke, Rocky Mountain Farmers' Union president. 'They don't need any more.'
Contact us at letters@time.com.
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