President Donald Trump has promised soybean growers and other farmers impacted by the on-going tariff war with China $16 billion in additional assistance for 2019 financial losses.
Trump, in a recent speech, said that farmers are patriots and thus willing to sacrifice for the long-term good of the country.
It is uncertain if the money that the president promised can be found or if Congress needs to OK the expenditure. The president remains popular with farmers and other voters in rural states in part because China has been a bad actor with regards to the theft of intellectual property rights.
However, both China and the United States have benefited from trade. That’s especially true when it involves crop farmers and hog producers.
The trade dispute escalated with Trump’s decision to impose higher tariffs on Chinese products following the breakdown of talks that were held earlier this month in Washington, D.C. The president increased tariffs on $200 billion worth of Chinese products.
Despite the president’s warning that China shouldn’t respond by increasing its own tariffs, it quickly to do so.
China raised tariffs by $60 billion on U.S. products, which is horrible news for beef, vegetable and fruit producers. The move to increase tariffs 5 percent upward to 25 percent on some products by June 1 means the Chinese market is effectively closed.
U.S. business interests and the Chamber of Commerce have pressured the White House to back off before the war spins out of control, which it appears to be doing. Major farm organizations warn that the despute has hit farmers’ pocketbooks at a time when many sectors are already struggling.
Trade talks aren’t expected to resume until Trump and Chinese President Xi Jinping meet at a June economic event. Although the president says a great trade deal may be in the offing, there are no guarantees.
Both sides will lose big time if the fight continues much longer. Both nations will see their critical Gross National Product output decline along with economic growth.
The United States has tried high tariffs before. In 1930, Congress moved to help northern manufacturing industries by putting high tariffs on imported products. Economists generally agree that the Smoot-Hawley Act worsened the Great Depression.
Wars — fought with weapons or tariffs — always have unintended consequences. The fear in farm country is that even when the trade dispute ends, China will turn to other suppliers for farm products. The damage done may be permanent if that would happen.
Trump’s promise to deliver additional assistance to farmers caught in the trade war is well and good. However, most farmers would rather make their money from the market.
The tariff fight has turned into a crisis with far more losers than winners. Perhaps cooler heads will prevail on both sides so that a workable deal can be struck. Failing that, both nations will suffer from slower economic growth.
For farmers, a continuation will add to their mounting financial woes.