Sunday, July 08, 2018

Time's Up For Farmers As Trump Trade War Begin

News Channel 5 - Farmers across the State of Tennessee woke up to a new economic reality on Friday morning, multi-billion dollar Chinese tariffs that will likely cripple farmers already on the brink of collapse.  ... For Will Hutchinson, a lifelong farmer in Rutherford County, the tariffs couldn’t have come at a less opportune time. His 70 acres of soybeans are already in the ground.
He estimates the impact of the $34 billion tariff on imported U.S. goods to China, including soybeans, will cost him more than $20,000 this growing season. (For the News Channel 5 video or the text of this story, follow this link.)

Rod's Comment: The Trump Trade War is going to bankrupt farmers as the above story illustrates. It will also add up to $5000 to the cost of new cars and pickup trucks, and increase the price of many things we buy. Even the craft beer brewing industry will be hurt, Craft brewers have to have steel kegs and aluminum cans and with the ban on imported steel and aluminum. steel kegs and aluminum cans will cost more. Small emerging craft brewers operate on a small margin and cannot compete with established firms with these higher prices. Jack Daniel and Harley-Davidson will see a decrease in exports.

While there will be some winners, such as steel workers who may be put back to work, there promises to be many more losers. Losers will include consumers who will pay more for numerous goods. Also, however, will be American workers who will be thrown out of work. Farmers who can't sell their soybeans will be forced into bankruptcy.  With increased prices, some consumer will simply delay or forgo a purchase and those who work in the auto sector, for instance, may face layoffs. For those consumers who don't let the $5000 higher price of a new car deter them, then they will  have $5000 less to spend elsewhere or to save. Money not spend elsewhere means that other producers and sellers of goods are hurt. Money not saved makes borrowing more costly and dries up money available for investment.

It is time for Republicans to stand up to Trump and resist this ill-advised trade war. A tariff is a tax paid not by foreigners who export goods to America, but by the American consumer. The Trump Trade War is likely to undo the good done by the recent tax cut and Trump's regulatory reform. It is time to end this trade war now before it does serious harm.

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