China fired back against Trump by putting tariffs on many U.S. agricultural products, a move that has helped drive the plunge in crop prices. It’s a blow to farmers such as Walton, who voted for Trump. China and other nations aimed their counterblows at farmers and small manufacturers in “Trump country” in the hopes that some voters would reconsider their support for the president.
So far, there’s little sign that is happening.
Among the 15 states most affected by the tariffs (calculated by the Brookings Institution), Trump’s approval rating is 57 percent, according to a Washington Post-Schar School poll conducted June 27 to July 2. On Election Day in 2016, 52 percent of voters in those same states supported Trump.
The 15 states with the highest share of jobs at risk in the U.S.-China trade war are Arkansas, Iowa, Nebraska, Alaska, Idaho, Mississippi, Washington, Kentucky, South Dakota, Alabama, Delaware, Michigan, Indiana, Wisconsin and North Dakota, according to a Brookings analysis by senior fellow Mark Muro.
“President Trump has my support now, but that could always change,” Walton said. “Personally, I’m in wait-and-see mode.”
The turning point for Walton is likely to come at Christmas. Most of his 2018 soybean and corn crop is already under contract, and he locked in the prices in the spring, when it was higher than it is now. But when snow covers his farm, Walton and most farmers begin planning for next year by checking in with their lender and usual buyers. If the trade war is still on — or even worse than it already is — it will probably result in substantial losses in 2019 that could put some farmers out of business.
“It’s going to take big tangible effects like a farm closing or Harley-Davidson jobs going overseas to shift people’s opinions,” said Chris Ellis, who studies voters as head of the Survey Research Laboratory at Bucknell Institute for Public Policy.
About an hour down the road from Walton is Cedar Ridge Winery and Distillery in Swisher, Iowa. Jeff Quint founded the craft distillery in 2005, and he prides himself on being among the pioneers of a new wave of craft distilleries. He had big plans to expand overseas — in Europe and China — as demand for U.S. whiskey has been soaring lately. He had two big containers of whiskey ready to ship to Europe this week, but his buyers in France and Denmark got nervous.
The European Union, angry at Trump’s tariffs on European steel, punched back with a 25 percent tariff on American whiskey. The tax makes U.S. brands more expensive than competitors from Ireland and Canada. Quint was forced to slash his prices, taking a financial hit because he doesn’t want to lose his “toehold” in a new market.
“I can tell you firsthand who eats the cost of that tariff,” Quint said. “The other thing I worry about is we might be fostering the developing of craft distilling in other countries right now because this puts us at such a disadvantage.”
Quint often leans to the right when it’s time to vote, although he’s not a straight party voter. Like Walton, he says the trade war hasn’t changed his vote yet, but if Trump doesn’t find a resolution by 2019, it might.
“December 31 is a magic date for us,” Quint said. “I have a wait-and-see attitude now."
Across the nation, there’s unease about Trump’s tariffs. A majority of adults, 57 percent, disapprove of Trump’s handling of international trade, according to the recent Post-Schar School poll. Fifty-six percent think U.S. and Chinese tariffs will be “bad” for jobs, and 74 percent believe the standoff will be bad for the costs of goods in the United States.
There’s a clear understanding of the likely consequences of a prolonged trade war, yet trade remains a low issue on most voters' minds heading into the midterm election. Only 4 percent of registered voters said it was the single most important issue to them in their midterm vote, well below the 24 percent who said “the economy and jobs," the 20 percent who said health care and the 19 percent who chose immigration. Gun laws and taxes also outranked trade.
“I don’t think farmers are going to change their mind on Trump on any one thing,” said Casey Guernsey, a farmer and former GOP state representative in Missouri. He was quick to add: “It’s not a very fun time to be on the farm right now.”
While most economists have urged Trump not to pile on more tariffs because the effects on jobs and the economy could be detrimental, they acknowledge that the impact to date has been modest. The average cost to a family so far is about $80 more a year, according to Mark Zandi, chief economist at Moody’s Analytics. That $80 bump would be hard to distinguish from the normal rise in prices that typically occurs.
“The tariffs in place so far are very small in a $19 trillion U.S. economy," said Muro of Brookings. “Even if people are experiencing some pain from the tariffs, will they blame it on Trump or on China?"
The most heavily impacted states — Arkansas and Iowa — have fewer than 4 percent of the state’s jobs in industries directly in the crosshairs, according to Muro’s analysis.
Trump has repeatedly cast China as the enemy on trade, blaming the Chinese for stealing billions of dollars worth of U.S. intellectual property and innovations. In his many rallies across the country, he has told his supporters, especially farmers, to accept a little short-term pain because he will get them a much better deal in the end.
But the longer the tariffs stay in place, the more the harm grows. If Trump moves forward with 10 percent tariffs on another $200 billion worth of Chinese goods by the end of the summer, the average cost to a family would jump to about $250, according to Zandi. It could get even worse for farmers if crop prices continue to fall. The price of soybeans and corn are both down about 20 percent since the end of May. In Iowa, farmers typically rotate between soybeans and corn, which doesn’t help now.
On Wednesday, Trump tweeted from Europe that he was “always thinking about our farmers,” but his administration has yet to unveil a plan to give them direct aid. Farmers — and the lawmakers who represent them — worry there’s no plan, and trade negotiations appear to have stalled.
“Despite the serious economic consequences of ever-increasing tariffs, today there are no serious trade discussions occurring between the U.S. and China, no plans for trade negotiations anytime soon, and seemingly little action toward a solution,” said Rep. Kevin Brady (R-Tex.).
This week, a senior administration official argued that the impacts have been modest, telling reporters, "So far, agriculture exports have been holding up quite well.” Most experts say that’s because countries like China were buying a lot of U.S. products before the tariffs kicked in July 6. There’s a wide expectation that exports will fall now, erasing the earlier gains.
In interviews with farmers and small-business owners in a half-dozen states, all said they were feeling pinched. They were putting off purchases of new equipment, not hiring more workers and fearful of permanently losing customers overseas. But all of them also said they believed they could survive 2018. It’s next year that they — and their bankers — worry about.
“At the level soybean prices are now, it doesn’t [generate profit] and we can’t stay in business,” said Willard Jack, a Mississippi farmer and state representative for the American Soybean Association.
Jack, who voted for Trump and likes what the president has done on taxes and regulations, has been in Washington all week urging lawmakers and the administration to rescind the tariffs and resume talks with China.
“I can see the handwriting on the wall for the president,” Jack said. “We have to get this over with very rapidly.”