FARM WELFARE A TRUMP TARIFF CONSUMERS PAY
The Pescatarian diet is not about politics but when politics hurts the Farmer, it hurts all Americans. For most of the century, the American Farmer was the most productive on earth and fed the world. US Farmers could grow all the food needs of the nation and still have plenty to export. In fact, the Farm export markets were built entirely by farmers without government assistance or meddling and hummed along smoothly for years. Then along came the Politician and Trump Tariffs farm welfare.
Ayn Rand called the Politician the, “The intellectual bottom rung.”
Overall the Farmer was doing pretty well before Trump came along. Both Bill Clinton and Ronald Reagan reduced farm subsidies established in the 1930s and this encouraged the Farmer to develop robust global export markets. Farms can be profitable if left alone by the government.
The year before the farm boy from Queens NY, Donald Trump, came forth with his Tariffs and China Trade war, the US farmer was at peak productivity. 400,000 soy farmers had produced a whopping 109 MMT of soy with nearly all of it sold to China with Commodities contracts. Wheat and corn were also giant crops destined for China ports.
In a most naive display of commodities and trade ignorance, Trump tweeted that if the US farmer lost any money to “CHINER”, the US Government would backstop their losses.
This is the tweet heard around the world.
Almost instantly the US Commodity markets crashed. This tweet by TRUMP, the Wharton Undergrad stable genius, caused Force Majeure and every one of those Chinese Futures Contracts across the board, became Voidable.
Understand with commodity contracts, the crops are in the field, in the ground, the farmer is tending the young plants, and the contracts set the prices and pay for the finished crop months in the future. That is why they are called “Futures Contracts.”
Trump called himself the Tariff man who had erected Tariffs on Chinese products repeatedly claiming that “CHINER” would pay for the Tariffs when in fact it was the US Consumer that paid the Tariff Consumption Tax. The Pride of Wharton. Trump’s very naive notion, in contrast to all economics, was that Tariffs would stem the trade deficit with China.
What Trump didn’t apparently know is that the US trades with 206 nations and has a trade deficit with all of them. A Trade deficit is a function of savings and Americans save very little, on the order of 1%. The Chinese save on the order of 34%. More simply the US Spends on cheaper foreign goods which exports US inflation to the rest of the world through the US Dollar reserve currency. The Trade Deficit has almost nothing to do with whether China or any other country buys more grain from US farmers.
From China’s point of view, the Trump Tariffs were an insult.
It showed disrespect for America’s largest buyer of goods and services. China retaliated and stopped buying US agricultural products and services. China began the long process of finding other agricultural sources. They looked to Brazil and Argentina and Russia. By the way the US has a large surplus of trade services, SURPLUS as opposed to tangible goods. China also retaliated against US Services.
The end result was predictable. At harvest time, there were no buyers for US Soy production and most of it rotted in the fields. 300,000 US soy farmers went out of business because of a Politician’s ill-conceived tweet.
This damage to the Famer caused by Trump was just the tip of the iceberg. Over the following years that followed with Biden keeping the Trump Tariffs on China, China diversified its supply chains. Brazil has stepped up to the plate and grows three times more soy than the US Farmer. Brazil became the world’s leading grower of corn stripping the US of that title and Russia became the world’s leading grower and exporter of Winter Wheat. One US Farm export market after another vanished with Trump-Biden Tariffs.
Trump then began the rollout of Farm Welfare with a willing Congress. 28 farmers who occupy congressional seats collectively received $16 million in farm subsidies and welfare.
This Trump Farm welfare in the hundreds of billions of taxpayer dollars is just another backdoor cost of Tariffs that comes from retaliation when you attack your largest customer. It adds to the US debt and adds to inflation.
Those giant Chinese Markets for soy and other crops are gone forever. At present the US farmer only produces 34 MMT of soy, with very few for export. When Biden got in office, he didn’t change a thing. He added to the tariffs and sanctioned chips and other goods China was buying. He kept the tariffs and kept the farm welfare while things on the farm deteriorated. The most astonishing fact is that by 2023 the US farmer could no longer supply the food needs for America. They were in a food deficit of $36 Billion dollars and in 2024 it was worse at $48 Billion dollars.
Politicians the intellectual bottom rung… The American Farmer is the victim of failed Trump-Biden Tariff protectionism.
But it is far worse than that. US green policies have required that tractor and farm equipment in the US meet various clean air standards. The net result is that American Farm equipment is roughly ten times more expensive than Chinese tractors and farm equipment. Equipment overhead, loans, seeds, and fertilizers all combine to increase overhead.
This is not the first government Tariff Disaster.
The Smoot-Hawley Tariff Act was signed into law on June 17, 1930. It was also known as the Tariff Act of 1930. The Smoot-Hawley Tariff was a protectionist law that raised tariffs on thousands of imported goods. It was sponsored by Senator Reed Smoot (Utah) and Representative Willis C. Hawley (Oregon). President Herbert Hoover signed the bill into law.
The Smoot-Hawley Tariff was widely opposed by economists, business executives, and the public. It was a disaster, according to taxfoundation.org.
The tariffs worsened the Great Depression. The United States became a symbol of “beggar-thy-neighbor” policies especially when the Dust Bowl arrived. Trading partners added to the misery of Americans by raising their reprisal tariffs, which froze international trade. In addition, it damaged Hoover’s standing with his party’s progressives and led to the Democrats sweeping the election of 1932. Both Smoot and Hawley were removed from office by voters in 1932.
The Dust Bowl
The Smoot-Hawley Tariff Act, which significantly increased tariffs on imported goods, is not directly responsible for causing the Dust Bowl. Still, it is considered to have worsened the economic conditions during the Dust Bowl era by further depressing agricultural prices and exacerbating the existing agricultural crisis through reduced international trade, which ultimately impacted farmers already struggling with drought conditions in the Great Plains region that led to the Dust Bowl.
The Dust Bowl was primarily caused by environmental factors:
Severe drought combined with poor farming practices in the Great Plains led to large-scale soil erosion, causing massive dust storms.
The Smoot-Hawley Tariff was passed during the Great Depression, aiming to protect American farmers from foreign competition by raising tariffs on imported agricultural goods. However, this led to retaliatory tariffs from other countries, significantly reducing the market for American exports of every kind, and extending and deepening the Great Depression.
Then came the Government’s answer to a Government Created Problem. FARM WELFARE a giant boondoggle that continues today.
The first comprehensive farm bill, the Agricultural Adjustment Act of 1933, was part of President Franklin D. Roosevelt’s New Deal. Farmers were paid to reduce the production of certain crops. The government stepped in to control agricultural commodity prices through price fixing. The government controlled agricultural supply. Supply, Demand, and prices were all controlled by the Federal Government.
The programs have been modified and new programs have been added. Payment eligibility has expanded to include more programs and conditions. The largest beneficiaries are the large factory farms. Small farmers get the scraps. The most important problem is they have been difficult to remove once established just like all other welfare programs. Lobbyists, special interests, corporate interests, insurance companies and investment bankers ensure their pet programs survive while the taxpayer gets the bill.
In 1964 the US Congress gave Lyndon Johnson the power to lay Tariffs for National Security Reasons in support of the Vietnam War. Before this, the laying of Tariffs was under the exclusive control of the Legislative Branch. It is now under the control of one arbitrary and capricious Oval Office occupant.