Trump tariffs threaten US farmers' incomes

Washington (AP) - President Donald Trump's tariff policies have done more harm than good. As the tariffs take effect and China threatens retaliation, the prices of most U.S. agricultural products have fallen, and American farmers who had expected to make money this year are now facing not only lower prices for their crops, but also shrinking export markets in the future.

"Right now, our income is below the break-even point," said Martin, the Illinois farmer. Referring to Trump's tariffs, he said: "We know this is going to happen. We'll be interested to see how things work out."

As of last Saturday (April 5), the United States has imposed a base rate of 10 percent on goods from most trading partners. Starting Wednesday, dozens of economies, including the European Union, China and India, will face higher tax rates.

The equivalent US tariff rate on Chinese goods is 34 per cent, and with the 20 per cent tariff announced by Mr Trump upon his return to the White House, the US tariff on Chinese goods will stack up to 54 per cent.

In response, Beijing said it would impose a 34 percent tariff on U.S. goods, on top of previous tariffs of up to 15 percent on U.S. agricultural products. That means businesses have to pay more to import American products, hurting the competitiveness of American farmers.

China is the third-largest importer of U.S. agricultural products, after Canada and Mexico. The counter-measures from Beijing and other economies mean that US farmers, who strongly supported Mr Trump in last year's election, must now prepare to take a hit.

Slattery, the Wisconsin farmer, said China "will have less incentive to buy U.S. soybeans." It's much cheaper to import from Brazil."

The U.S. exports at least half of its soybeans and more sorghum to China. Chinese purchases of US agricultural products, including chicken, beef and other crops, reached US $24.7 billion (S $33.1 billion) last year.

But China's purchases of U.S. agricultural products actually fell 15% last year, largely due to lower sales of soybeans and corn due to increased competition from South America, the USDA said.

Mr. Slattery expects Chinese buyers to cut back further.

It is harder for farmers to find new markets when trading partners are targeted by tariffs

"Losing that market matters because it's expensive to find other buyers," said Barrett, a professor of agricultural economics at Cornell University.

Barrett noted that in the tariff wars that escalated during Trump's first term as president, China was "the only target and therefore the only country that retaliated." With all trading partners now targeted, farmers may find it harder to find new markets.

The National Federation of Farmers warned last week that "more than 20 percent of farm income comes from exports, and farmers rely on imports for critical supplies such as fertilizer and specialty tools." Tariffs will drive up the cost of critical goods, and retaliatory tariffs will make American products more expensive around the world."

The International Dairy Association also warned that imposing "broad and prolonged tariffs" on key trading partners and growing markets could undermine billions of dollars of investment to meet global demand.

According to the U.S. Department of Agriculture, retaliatory tariffs on the United States caused more than $27 billion in lost agricultural exports from mid-2018 to the end of 2019.

Although the Agriculture Department has provided $23 billion to help farmers affected by the trade dispute, Martin likened the bailout package to a "Band-aid, a temporary solution to a long-term problem." "The president said in the long run things are going to get better, so I think we need to decide how much patience we need to have," he said.