Oh, What a Lovely Trade War

Trump Maladministration

Tighten those belts, folks. The trade war officially began yesterday.  Martin Longman calls July 6, 2018 “a day that will live in infamy.” Catchy. Martin Longman continues,

Of course, the retaliatory tariffs are designed to do the most damage to Trump’s base thereby dividing the Republicans and eroding Trump’s position. Europe went after Kentucky bourbon and Harley-Davidson in a clear message to Mitch McConnell and Paul Ryan. China is going after pork and soybeans as well as the automotive industry that is as important these days in Alabama, Tennessee and Indiana as it is in Michigan. In any case, those are all state that voted for Trump.

It’s hard to say how people will react. Will they really treat a trade war like a shooting war and rally around the president and the flag? That might happen. On the other hand, maybe a lot of people will turn on the president and his party when they feel a very direct sting from his policies.

Today, many eyes are on Iowa. Ed Kilgore writes,

Now maybe something will soon happen to mitigate the damage. But it’s also entirely possible that [Iowa Gov.] Terry Branstad has about as much control over collateral damage to Iowa from Trump’s trade policies as you or I have, and that all those confident assurances Iowans were receiving from Washington were just Trumpian hype associated with the belief that Beijing would fold its hand, leaving POTUS as the undisputed master of global commerce. The grim reality is otherwise. China buys at least 60 percent of the Iowa soybean crop. The pain will only get worse if harvest time comes along with the trade war still raging, and there’s no particular reason to think it will be quickly resolved.

Tom Philpott writes at Mother Jones that prices for the two biggest crops in the U.S., corn and soybeans, began falling in May.

After putting its trade beef with China on hold for a few weeks, the administration suddenly reiterated its tariff threats, and added Mexico, Canada, and the European Union to the mix. China is by far the biggest buyer of exported US soybeans; Mexico holds that position for corn.

The current slide comes at a precipitous time for US farmers. They have about 179 million acres of the two crops growing in their fields—a combined land mass equal to nearly two Californias, and just 1 percent less than last year’s plantings. To make a profit on these crops, farmers will have to make at least $4 per bushel on corn and $10.05 on soybeans for the 2018 harvest, a University of Illinois analysis found. Currently, the two commodities fetch $3.43 and $8.40, respectively.

Lots of stories note that farmers in South America are planting lots of soybeans in hopes of selling them to China. North American farmers could permanently lose major markets.

There is talk of a big bailout for agriculture if the damage is as bad as it looks.

But Trump, who has attacked Harley-Davidson for plans to move some production to its overseas plants to avoid retaliatory European tariffs, is looking to save “my farmers” from the trade war he launched. Rural support was critical to his presidential victory. Unhappy farmers could spell trouble for midterm elections.

Agriculture Secretary Sonny Perdue said last month at a Chicago convention that the Commodity Credit Corporation is a “tool” he’s considering to comply with Trump’s instructions to “craft a strategy to support our farmers against retaliatory tariffs. The program, which was started to help farmers during the Great Depression, allows the Agriculture Department to borrow as much as $30 billion from the U.S. Treasury that could be used to buy crops from farmers that would go unsold in a trade war.

However, politicians on both sides of the aisle express unhappiness at a bailout. And they doubt even $50 billion would be enough.

Salt Lake Tribune

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9 Comments

9 Comments

  1. Tom_b  •  Jul 7, 2018 @4:51 pm

    The Market so far seems to believe Trump will cave quickly on the the tariffs, like he caved on North Korea. The Market is underestimates how stupid the guy is.

    Congress could act. Surely, they have the votes. Democrats don’t like tariffs; neither do most Republicans. But, they sit on their hands while McConnell and Ryan triangulate on what their voters want. A lost cause; most of the deplorables can’t spell “tariff”, nor hope to comprehend macroeconomics.

  2. moonbat  •  Jul 7, 2018 @5:27 pm

    But Trump is God's Chosen Man to lead the country. 

    Yesterday, when I was trying to find a movie in an air-conditioned theater to escape the record heat, I discovered that <a href="https://www.youtube.com/watch?v=eKZGIvLQD9I">The Trump Prophecy</a> was showing at the local multiplex. I dug into it – it's a production of Falwell's Liberty University and is based on the visions / voices / thoughts – not sure which – a firefighter received back in 2011. 

    I didn't think I could handle 90 minutes of this in a theater so I sought out the book it's based on. There were many positive reviews, but I focused on the negative ones: 1) an enormous amount of time spent on the firefighter's life and relatively little on the prophetic visions, 3) "total crap" said someone with a master's degree in theology, and 3) the firefighter received "prophecies" that didn't come true, such as Obama not being re-elected in 2012. For fundies, that's a clear sign that this man is no prophet. A true prophet is correct 100% of the time. And yet right wing Christians are eating this up.

    Explaining how it came to pass that fundamentalist Christians are some of Trump's strongest supporters surely will be the fodder for many investigative reports, movies, and PhD theses.

  3. jrkrideau  •  Jul 7, 2018 @6:57 pm

    I have not looked at the Canadian list but it is targeting US booze as well. Could be interesting times in Kentucky.

    Canada, like China, is very deliberately targeting areas of Trump support. I wonder if the EU is doing the same?

  4. drew  •  Jul 7, 2018 @7:15 pm

    Brandstad is the former governor of Iowa and presently our ambassador to China. That info puts that blockquote in a slightly different light. Hoping for "control over collateral damage to Iowa from Trump’s trade policies" makes a little more sense in that light.

  5. Billikin  •  Jul 7, 2018 @7:50 pm

    The US government will be buying up soybeans, corn, and booze? I trust they'll be allowing domestic prices to drop. (Yeah, right!) I can't wait to sit on my back porch enjoying some tofu and cornbread while sipping my Bourbon and branch. 😉 And topping it off with some weed, OC, while I watch the California wildfires at a safe distance.

    Just because it's all going to hell doesn't mean we can't enjoy the ride!laugh

  6. Swami  •  Jul 7, 2018 @8:39 pm

    moonbat…There's gold in them thar rubes!

  7. paradoctor  •  Jul 7, 2018 @11:02 pm

    moonbat: Why do fundamentalists support Trump? Here's a simple explanation: the fundamentalists have sold their souls.

    But neither fundamentalists nor their skeptical investigators will accept that explanation; the skeptics because it does not conform to their philosophy, and the fundamentalists because it does.

  8. doug  •  Jul 8, 2018 @9:13 am

    Harvest season for soybeans is late September to October. I forget, what else is happening about that time?

  9. grannyeagle  •  Jul 9, 2018 @1:46 pm

    I read that Ivanka's products which are all made overseas are exempt from the tariffs.  But of course!