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AEIdeas

From today’s StarTribune article “Minnesota farmers consider asking for government help as trade war worsens downturn that started years ago“:

The escalating trade war is imposing new burdens on Minnesota’s vast and economically important agricultural sector. Farmers have already endured almost five years of marginal profits as they produced record volumes in summer after summer of good weather. Now, the trade war appears likely to tip them from small profits to sizable losses. Many are reluctantly preparing to take what they consider a distasteful step: turning to the government for help. Last Tuesday, the U.S. Department of Agriculture started accepting farmer applications for $4.7 billion in emergency aid aimed at helping them through this year. But the market is already signaling danger for 2019. Bankers who provide capital to farmers won’t stand for losses and, instead, will likely force many farmers to sit on the sidelines. As many as 20 percent of farmers in the Upper Midwest won’t be able to get credit to finance spring planting, barring a miracle turnaround in prices, said Al Kluis, a commodity broker in Wayzata. Minnesota hog farmer Greg Boerboom said getting government aid for tariff-related losses would cover only a fraction of the shortfalls he will incur if prices continue to tumble. Farmers have lost big foreign markets like China and Mexico, which placed taxes on their products after Trump imposed tariffs on steel imports and pushed to recraft other trade deals. As a short-term response, the Trump administration responded by creating the aid program. Farmers can apply for aid if their adjusted gross income is less than $900,000, and must work with their local Farm Service Agency. Aid is capped at $125,000 per farm. Grain farmers must wait until harvest is complete. For Boerboom, $125,000 will be small consolation. He and his three children sell 300,000 hogs per year. At current prices, their losses in 2019 would be in the millions of dollars. Aid to farmers will “buy some time,” he said, but the reopening of trade is the real solution. “Hog producers in general just want the whole tariff issue solved and go back to open trade,” Boerboom said. “That’s the bottom line.”

MP: Note here at this USDA website linked in the article above that the Trump administration’s position is that it’s necessary for the government taxpayers to provide assistance to bail out U.S. farmers “in response to trade damage from unjustified retaliation by foreign nations.” Hey, wait a minute……

Trump started the trade war by imposing tariffs on $34 billion of Chinese goods in July. As expected with 100% certainty, China’s predictable response was to retaliate by imposing 25% tariffs on U.S. soybeans, corn, pork, poultry, and fruit. Mexico, Canada, and the E.U. also targeted U.S. farm products to retaliate against tariffs on its steel, aluminum, and other metals. So if Trump starts a trade war by imposing tariffs on Chinese products, that is apparently “justified.” But when China imposes retaliatory tariffs on American products, that’s considered “unjustified”? Did Team Trump really think that China would just “roll over” and accept Trump’s tariffs without retaliating?

As Trump’s tariffs continue to backfire, he is hopefully learning the hard way that his trade war will really not be that easy to “win” (OK, that’s way too optimistic and giving him too much credit) and is in fact creating a lot of collateral economic damage by inflicting great harm on American farmers, as just one example of Trump’s trade war’s destructive “friendly fire” against US workers and industries.