Farmers, Economists See More Economic Pain From Trump’s Increased Tariffs
Ohio Valley farmers say the latest tariff escalation between the Trump administration and China could continue to hurt their businesses, with many farmers already facing financial struggles.
As Chinese officials visit Washington, D.C., for more trade talks, the Trump administration announced this week increased tariffs, planned to go into effect Friday, on $200 billion dollars worth of Chinese goods, accusing the country of reneging on trade promises.
Chinese officials have already threatened to retaliate if Trump follows through. Chinese goods, ranging from pork products and soybeans to shampoo could see tariffs increase from the current 10 percent to 25 percent.
Hord Farms CEO Pat Hord raises livestock in north central Ohio. He said he was surprised when he first saw President Trump threaten this week on Twitter to raise tariffs.
“It was frustrating, because we were hoping we were going the other way,” Hord said. “We don’t mind helping in [trade], we just don’t want to bear a disproportionate load of the pain. And that’s what we feel has happened.”
Hord said he’s had to scale back on investing in his business because of the uncertainty with trade talks and doesn’t have a good idea when a trade deal will be struck with China.
A monthly Purdue University survey of U.S. farmers published Tuesday showed a dramatic decrease in confidence among farmers that a trade deal with China will be reached by July.
This tariff escalation comes amid already depressed farm commodity prices in the world market. Some Ohio Valley farmers are taking on more debt and restructuring loans to survive these low prices, and economists say tariffs have made a stressed economic situation even worse for farmers.
“Our farmers that are in a very tight bind here in the short term, and it’s going to be a challenge for some of them to hold on,” University of Kentucky Agriculture Economist Will Snell said. “Not only are farmers nervous, but certainly lenders are as well. Because we’ve had some cash flow and liquidity challenges over the past couple of years.”
Snell said Ohio Valley soybean farmers have been able to manage the impact of Chinese tariffs by finding other countries to sell to, but that those markets might not be available later on in 2019.
American Soybean Association President Davie Stephens, a west Kentucky farmer, said in a statement that while the association understands the Trump administration’s trade goals, farmers are still “in a desperate situation.”
China has actually been buying some pork products from the United States because African Swine Fever, a virus affecting pigs, is decimating hog populations in China, so importers there are trying to keep up with consumer demand. But regional pork farmers believe tariffs would still hurt them considerably.
“This African Swine Fever thing, the way it is over in China, that’s going to have a big influence in everything,” West Virginia Pork Council State Director Jack Yokum said. “But if there’s more tariffs that go on, it’s gonna come back and affect producers all over.”
Because of this trade escalation, economists say consumers are paying the price for tariffs in other goods as well.
An analysis by the Peterson Institute for International Economics showed the current 10 percent tariff on aluminum, which would be increased on Friday for Chinese products, ultimately costs U.S. consumers $952,000 per job created in the U.S. aluminum industry.
Trade talks between China and the United States continue through Friday.