Farmers will pay the price for tariffs

Farmer tending to crops
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Besides the weather, the most important thing on the minds of American farmers is trade policy. Some 40 percent of all agricultural products are exported. Some products, like pork, get exported at even higher rates. Donald Trump and his determination to start multiple trade wars with friends and foes alike is going to challenge the basic business model of American farmers. It is almost unimaginable that the dramatic scope of U.S. actions on trade policy would affect relations with our closest allies, especially Canada, Mexico, Europe, Japan and South Korea.

The president’s own tariffs and protectionist policies have caused the Chinese and Mexicans to slap their own tariffs on U.S. agricultural exports, with the Canadians and Europeans soon to follow after a bizarre G-7 meeting where Trump did little to reassure our allies. Our enemies and our allies are smart people. They understand that American agriculture is especially vulnerable to tariffs given their huge reliance on exports.

{mosads}Furthermore, they understand that American farmers tend to be conservative Republicans and Trump supporters. So they are taking the approach of targeting agriculture products to hit Trump where it hurts. But you get the feeling that the president seems to not understand what impact agricultural exports have on the domestic farm and rural economy. Inevitably, the inconsistency of his rhetoric will produce damage for American farmers and ranchers in the long run.

So far, farmers appear to be sticking with the president. I have been surprised at this reaction. Trump’s actions have the potential of creating devastating consequences for basic commodities like soybeans, wheat, corn and rice, but also for the very important livestock industry which is responsible for almost half of the gross income of American agriculture. Maybe folks feel that farm state legislators will save the day for them, and they might, but the damage done in the interim could be considerable.

This is not the first time that trade politics has put American farmers at the center of the debate. In 1980, President Carter ordered a grain embargo on the Soviet Union, which had invaded Afghanistan the year before. This decision was especially unpopular with farmers in the United States whose grain sales to the Soviet Union were significant. Furthermore, the financial and political impact of the embargo on grain prices and related agriculture infrastructure lasted many years.

While Carter’s embargo and other actions were viewed by some in the foreign policy community as a credible response to the Soviet power grab, there is no question it had extremely negative consequences on agriculture businesses. Unlike today, so far, it also had serious political consequences for Carter’s campaign, and contributed to his loss to Ronald Reagan in 1980. It also hastened the departure of a generation of farm state voters from the Democratic Party to the Republican Party.

Though Carter lost his election and lost the support of farmers for his party, Trump has yet to face any real consequences from farmers for his zany trade policies. But that may be a result of a belief among many farmers that the president is just bluffing, trying to get a better deal for all American exporters by making threats on tariff impositions.

At some point, the rubber is going to hit the road. Trump has angered allies, challenged rivals, picked winners and losers in the energy economy, and demonstrated his strong belief in protecting various American industries from the realities of global economics.

Trump has contemplated carve outs here and there, like for Chinese technology company ZTE, but the agriculture industry is so high value and sprawling that a carve out to protect it from trade war reprisals by foreign countries would be impossible. If he sticks to his guns on his tariff proposals, how long will farmers stick with him?

America’s role around the globe has been key to our historic leadership in economic and geopolitical circles since World War II. We are a nation that engages, not retreats. Unless Congress and the agriculture industry respond forcefully to the president’s trade initiatives, it is one more nail in the coffin of U.S. leadership, in not only our shining cities on the hill, but also in our shining farms and small towns across our great country.

Dan Glickman served as U.S. secretary of agriculture under President Clinton and represented Kansas in Congress for 18 years. He is now vice president of the Aspen Institute. Follow him on Twitter @DanRGlickman.

Tags Agriculture Business Donald Trump economy farming Trade United States

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