The cost of Trump's trade war is being felt by farmers and consumers
In the end, nobody will win
Lately, I’ve been reading a lot about American soybean farmers.
The Minnesota Star Tribune reported last week:
Because of the trade war with China, U.S. soybeans cost about 20% more than South American beans. That’s due to trade duties imposed by the Chinese government in response to President Donald Trump’s increased tariffs on goods bound for the U.S. market.
China is buying cheaper Brazilian soybeans, dragging down prices for American soy farmers.
“Brazil can fill almost all of China’s needs — that leaves all of us American producers sitting here holding the bag,” said Dennis Fultz, a farmer in southwestern Minnesota’s Lyon County.
The New York Times reported this week that China’s decision to respond to Trump’s tariffs by halting purchases of US soybeans has had “devastating repercussions” for farmers in North Dakota:
Standing before a field of soybeans a few weeks away from harvest, (one farmer said): “All of it is unnecessary. The U.S. was not forced into this by anybody.”
Iowa isn’t immune, either.
US Rep. Zach Nunn, a Republican from central Iowa who backs Trump’s tariffs, met with concerned Iowa farmers last week.
The account I read on WHO-TV’s website doesn’t suggest he offered them much reassurance.
This has always been the danger of Trump’s approach to trade. I warned about this long before the 2024 Iowa caucuses and, later, before the general election.
Trump has supreme confidence that tariffs, or the threat of them, will accomplish his economic and foreign policy goals. He’s so confident he’s willing to put his most ardent supporters in rural America at risk to prove it.
Of course, those supporters may get some help.
Already, Republicans in Congress are talking about an aid package for farmers. US Rep. Glenn Thompson, chairman of the House Agriculture Committee, wants to use some of the tariff revenues that have been flowing liberally into government coffers to help.
Trump would surely be supportive. He once bragged farmers wouldn’t desert him at the polls because of what he’s done for them. Not only has Trump supported ethanol, but he sent billions of dollars in taxpayer aid to rural America to help blunt some of the damage done by his first trade war with China. (At the time, reports showed most of the aid was sent to America’s largest farm operators.)
In January, Treasury Secretary Scott Bessent was testifying to Congress and responded to a question about how farmers might be shielded from the impact of tariffs by tying the issue to political support for Trump. “The American farmers have been very loyal; 90% of rural voters voted for President Trump, so they should know that their interests are his interests,” Bessent said.
It’s not clear how much assistance might go to farmers this time. It’s also not clear how much it would even help. China has traditionally been a huge market for US soybeans.
What is clear, however, is there are millions of Americans—who aren’t farmers—who also are feeling the effects of Trump’s trade war, who don’t have any hope of government assistance. Instead, they will just have to eat the additional costs imposed on their families by Republican tariffs.
Those costs are big, too. In August, custom duties, most of them tariff revenues, amounted to $30 billion, a record.
To put that into perspective, that $30 billion in one month is more than the federal government raised in corporate taxes over the previous two months, according to the Cato Institute.
Tariff costs fall disproportionately on low- to middle-income Americans, but they hit everybody’s household budgets (including farmers). The Tax Foundation says the Trump tariffs, if they withstand court scrutiny, will amount to a $1,300 tax increase on the average US household this year. Next year, the tax would rise to $1,600. Some estimates have put the cost of the tariffs even higher. And analysts at the Yale Budget say those increased costs will wipe out any savings most Americans will get from the Trump tax cut that just passed.
Yet, there is no assistance plan being contemplated for these people.
The Trump administration has dismissed the idea the tariffs are costing Americans more money. But like water flowing downhill, these additional costs have to go somewhere. Government revenues of $30 billion a month don’t just appear out of nowhere. Somebody has to pay the bills.
Already, we’ve seen tariffs flowing through the economy. Look at the price of coffee and bananas. They’ve gone up. CNBC reports the cost of the tariffs are “slowly finding their way into consumer prices,” with the price of clothing, auto parts and electronics, among other goods, also higher.
I’m sure there is a lot of apprehension among America’s farmers about how all this will play out. But they aren’t the only ones. The Yale Budget Lab estimated last week that up to 875,000 Americans, including 375,000 children, will be pushed below the poverty line next year because of the Republican tariffs. But nobody is thinking about a way to help them.
Whatever happens, they’ll be on their own.
Along the Mississippi is a proud member of the Iowa Writers Collaborative. Please check out the work of my colleagues and consider subscribing. Also, the collaborative partners with the Iowa Capital Dispatch, which provides hard-hitting news and commentary by members of the Iowa Writers Collaborative. Please consider making a donation to support its work, too.
$15B lawsuit incoming in 3, 2, 1 ...
I always find it interesting when economic issues conflict with values which people hold dear. America has a tradition of deciding based on their pockets books rather than their values. Trump has shown little concern for outcomes that affect small businesses including family own farms unless it’s politically expedient to do so. The truth is Trump has an agenda that includes a tariff policy which creates winners and losers and the farm community are just an after thought. I don’t understand why the rural community supports him unless they are not seeking or concern for alternative views.