How Trump’s Tariffs Are Squeezing His Farmer Support Base
Farmers helped carry President Donald Trump to White House.
But as the former businessman threatens to unleash a global trade war, the same farmers are now forced to come to terms with how up to $150 billion in proposed tariffs on Chinese goods, and subsequent backlash from the Middle Kingdom, could hurt their livelihood.
“Things out here right now are tough already. We are already barely making ends meet,” says Daren Niemeyer, a 49-year-old farmer in Nebraska who voted for Trump in 2016, when asked about his thoughts of the trade war tensions between China and the U.S.. “It’s just kicking us while we are down.”
It’s a tense time for U.S. farmers, who could be in for rocky times as the U.S. and China heat up talks of tariffs. On Tuesday, China’s Commerce Ministry ramped up the trade dispute, saying it would impose a temporary 178.6% anti-dumping duty on U.S. sorghum imports. Those charges, which are also thought to be in retaliation to Trump’s proposed tariffs, are expected to hit on Wednesday.
That’s on top of existing tariff proposals. Among other agricultural goods, Niemeyer grows soybeans and beef cows—two of the 106 U.S. products China said in early April would be subject to a 25% tariff. If those taxes come to pass, Niemeyer thinks China will seek soybeans elsewhere in the world, leading to a glut in supply.
For the Nebraskan farmer, it’s a worrying thought. His income would fall at a time when funds are already tight on the farm. Earlier this year, an all-important piece of machinery used to harvest grain crops on Niemeyer’s farm—the combine—broke. Rather than replacing the combine with an upgrade, Niemeyer downgraded to fit a smaller budget: The broken 2008 model was replaced with a 2005 combine.
Soon, Niemeyer may also have to replace his 21-year-old tractor—but with the threat of a trade war with the country’s biggest soybean customer, “it might need to hold on for at least another few more years,” he said.
For 58-year-old Wanda Patsche, a hog and soybean farmer in Southern Minnesota, the daily uncertainty is troubling.
“I’m just really discouraged by what I hear,” she said, adding that she had been optimistic about the new administration and what it could do for the agriculture sector. “But with the NAFTA thing one day, and then things are going good. And then the next day you wake up, and you hear we’re going to put tariffs on Chinese goods. Oh my goodness. It’s like we’re a ping pong ball.”
Patcsche is still hopeful that the commander-in-chief is doing as many say he must be—negotiating in order to get a better deal on intellectual goods with China. But for now, the trade war talks, alongside Trump’s regular tweets about potentially ramping up proposed tariffs, has made it more difficult for her to operate. Patcsche is now in the process of pricing her soybeans to be harvested later this year and in 2019—but prices continue to fluctuate in part due to trade war fears. So she keeps a constant eye on the market. If she sells her soybeans at the wrong time, she could reap in less than expected.
“We are just being put through a lot of drama to get to that point,” says Patsche. “When you hear that rhetoric. It just gives us a lot of uncertainty. It makes it more stressful.We hope the tariffs are short lived. ”
The products chosen by Bejing were no random choices. It sought to hit where it hurt the most—Trump’s voting bas—in retaliation of a proposed $50 billion worth of tariffs the White House announced in March.
For his part, Trump has argued that the tensions between China and the U.S. won’t devolve into a full blown trade war. Instead, he says he is negotiating better trade terms with China, and pushing Chinese officials to protect foreign companies’ intellectual property rights. The proposed tariffs, he says, are just leverage.
Nevertheless, it’s a source of frustration for farmers who say they are caught in the middle of a fight not about them. While the trade deficit in the U.S. has irritated the U.S. president, farmers point to agriculture as one of the industries where the U.S. has consistently posted a surplus of exports, totaling about $20 billion in 2016, according to the U.S. Department of Agriculture.
That’s not to say the farmers think a trade war is imminent—or that they have lost faith in Trump.
“The tariffs are concerning, but at the same time, I want to look long term. I want to be sustainable 10 to 15 years from now,” said John Canary, a 34-year-old farmer in Indiana.
Certainly, China may turn to other soybean-producing countries such as Brazil, where it is already paying a higher price. But at least in the near term, those countries may not be able to handle the demand—in turn buying from the U.S. producers.
But what is for certain: Such tariffs will be painful for the economy of both China and the U.S.
“The annual loss in U.S. economic well-being would range between $1.7 billion and $3.3 billion,” Wally Tyner, Purdue University Agricultural Economics Professor, noted in a study. “Chinese economic well-being also falls if they impose a tariff, in some cases as much or more than for the U.S. The reason for that is that soybean imports are very important to their domestic economy.”
Moreover, it’s hard to say that the trade war dispute will end quietly or without more uncertainty for the farmers. Chinese President Xi Jinping has been consolidating his power recently, reason to believe the leader will seek to display strength, says Gary Hufbauer of the Peterson Institute for Economics. For farmers, that could mean more of the fear-inducing rhetoric between the two nations that has kept the price of goods such as hogs and soybeans rocky in recent weeks.
When asked whether he would vote for Trump again during the 2020 elections, Niemeyer pauses—and then clarifies that while he voted for Trump, he was not 100% behind the candidate—but thought him better than the alternatives.
“I can’t say one way or the other—we’ll have to look at what the evil looks like, I guess,” he said.
And as for Trump—his report card is being written as he tweets.
“He billed himself he was a great negotiator,” Niemeyer said. “Now, we will see.”