Yet in a matter of months, President Trump has managed to fray — and possibly sever — many of those ties.
For bogus “national security” reasons, among other rationales, he has provoked nearly every one of our major trading partners into slapping retaliatory tariffs on tens of billions of dollars’ worth of American-made agricultural products.
More than a third of U.S. orange juice and apple exports are caught up in tariff actions, according to researchers at the Peterson Institute for International Economics. The same is true for half of U.S. foreign sales of whiskey and two-thirds of soybeans. And a whopping 89 percent of U.S. sorghum exports have been hit with tariffs thanks to Trump’s trade war.
Further, the strengthening dollar — also due in part to administration policies — is making U.S. goods more expensive, too.
When U.S.-made products get more expensive, customers switch to different suppliers — perhaps permanently. Which is why agricultural groups have been gently asking the Trump administration to cool it with the tariffs already and to please, please wrap up his promised “smarter” trade deals.
The first tranche of Trump’s $12 billion agricultural bailout program begins Tuesday, when farmers and ranchers — a key voting bloc in congressional districts across the country, it’s worth noting — can start applying for subsidies to offset trade-related losses. The bailout package, which does not require additional authorization from Congress, relies in part on a 1933 law created to help farmers hit by the Great Depression; the Agriculture Department has said this is the first time it has been used to compensate for losses from trade. The program is three-pronged, involving direct payments; purchases of surplus food; and some meager money to subsidize the marketing of exports.
Needless to say, none of this jibes with the president’s claims that he favors free markets, hates handouts, despises political favoritism and is tightening the federal budget.
It’s not even consistent with his stated desire to get out from under China’s thumb.
That farmer bailout spending, after all, looks like it will be paid for at least partly through more federal borrowing — including, presumably, from China, which is the largest foreign holder of U.S. Treasurys.
Because, hey, why sell soybeans to China when instead we can borrow from China to pay farmers not to sell soybeans to China?
Soybean farmers could certainly use the money. Supply and demand for their products could be way out of whack this year.
“I have never seen a soybean crop this good,” Peter J. Meyer, senior director of agricultural commodities analytics at S&P Global Platts, told me last week, shortly after he returned from a crop tour. For the first time in many years, farmers planted more soybeans than corn, he said, and yields have been exceptionally strong.
Simultaneously, orders from China — by far the top foreign purchaser of U.S. soybeans — have plunged. When we spoke last week, Meyer said Chinese orders for the marketing year beginning Sept. 1 were less than half their level from the same time last year.
Unsurprisingly, in light of such developments, soybean prices have fallen about 20 percent since March.
Industry groups have offered polite statements of gratitude for Trump’s bailout plan. Farmers can be proud, though, and to many, it feels like Trump is just rubbing salt in a self-inflicted wound.
“The line I kept hearing is, ‘We don’t want a welfare check. We want open markets,’ ” Meyer said.
Especially since the welfare check could be a one-time disbursement, whereas markets could be closed off indefinitely.
Meanwhile, other industries finding themselves collateral damage in Trump’s trade war are left to wonder where their government cheese is.
U.S. seafood suppliers, factories that purchase steel or aluminum, and chemical companies are suffering, too. Threats of additional tariffs and lingering uncertainty over trade policy are also causing firms to reevaluate or delay investment, as University of Chicago Booth School of Business professor Steven J. Davis noted recently.
Thus far, the administration has not been able to unearth a Depression-era law to help buy off the votes of the workers in those industries ahead of the midterms, too. But as the trade war rages on, you can bet Trump will keep looking.