His trade war will hurt business at a time when the rural population is aging, and it will probably hollow out farm communities.
.. The president is here to trumpet a $12 billion plan to aid American farmers. Why do they need aid? For Iowans, it’s because 33 percent of our economy is tied, directly or indirectly, to agriculture, and Mr. Trump recklessly opened trade wars that will hit “Trump country” — rural America — hardest and that have already brought an avalanche of losses. Indeed, the impact of his tariffs will probably be felt by family farms and the area for generations... Once those markets are gone, they will be difficult to recover. Commodity prices continue to drop, and good weather suggests an excellent crop is in the making, which will drive prices further down... Rural America is going to be hollowed out very quickly. Farms will become consolidated, and towns that are already in trouble will certainly die.Iowa’s farmers are aging, and younger farmers aren’t replacing them proportionately. Sixty percent of Iowa farmland is owned by people 65 years or older, and 35 percent of farmland is owned by people 75 or older.
.. the average age of the American farmer was 58.3 years. This isn’t because young people in rural America don’t want to farm; it’s because, if it isn’t already the family business, the costs are much too high to allow many of them to get into it.
.. losses and farm consolidation accelerated by Mr. Trump’s tariffs will make the devastating 1980s farm crisis look like a bump in the road as it drives a significant rural-to-city migration.
.. Smaller operations don’t have the capital to weather a trade war and will be forced to sell, most likely to larger operations.
.. Another casualty: our community banks. As farms get larger, farm loans are less likely to be local. A big operation with farms in dozens of counties that maybe even cross state lines probably won’t use local banks for credit.
When our community banks are gone, one of the major economic engines of our small towns will be gone.
.. At a certain point, populations won’t be enough to support rural hospitals and clinics, and they, too, will be gone. Rural hospitals are one of the major employers in the community. Even if you have a good manufacturing company in town, if you lose the hospital, they won’t be able to attract the employees they need.
.. Some of the farmers I speak with are unwavering in support of the president; they’d vote Republican even if Mr. Trump personally slapped the heck out of the preacher at the church potluck. But others are starting to recognize how the economic impact of the tariffs is hitting them personally.
.. Farmers take out lines of credit in the spring — usually due the following Jan. 1 — to pay for seed and other input costs, and then pay the loans back after harvest. Like any other loan, there are consequences to not paying, including losing the farm. Farmers are going to know before the midterm elections if they are going to be able to pay back loans.
.. The larger farm operations and the larger agribusinesses will be hovering, looking for any weakness, and ready to purchase smaller farms. And rest assured, when the Trump payments are made to farmers, the larger operations will be the ones that gobble them up.
.. most rural Republicans aren’t farmers, and many are Fox News devotees. So when they turn on Tucker Carlson or Sean Hannity, the hosts will likely extol the “virtues” of Mr. Trump’s farm policies and tariffs rather than the reality of their failures.
Trump, E.U. announce deal to avert escalation of trade tensions
- The E.U. charges a 10 percent tariff on imports of U.S. automobiles, and the United States has a
- 2.5 percent tariff on European cars.
- The United States also charges a 25 percent tariff on light truck and SUV imports from other countries.
.. The disharmony within the White House is spilling into public view, something that appears to be bothering Trump. On Wednesday, White House budget director Mick Mulvaney said at a CNBC event that he and National Economic Council Director Larry Kudlow were at odds with others on how to proceed on trade but that Trump made the ultimate decisions on his own.
.. A tweet suggests Trump is irked by people questioning his approach.
“When you have people snipping at your heels during a negotiation, it will only take longer to make a deal, and the deal will never be as good as it could have been with unity,” he wrote Wednesday . “Negotiations are going really well, be cool. The end result will be worth it!”
Trump’s trade war is economic suicide
When President Trump imposed a 25 percent tariff on steel imports last month, America’s largest nail manufacturer had little choice but to raise its prices. Mid Continent Nail Corporation quickly lost 50 percent of its orders as customers opted for cheaper suppliers. Within weeks, the firm had to lay off 60 workers. Up to 200 more might lose their jobs by the end of this month.
If the tariff isn’t lifted, the company could fold by September.
Mid Continent and its employees are early victims in Trump’s trade war. There will be many more if the president continues to raise import costs and anger our trading partners.
.. American consumers — not foreigners — will ultimately pay the bulk of the price for these trade obstructions. The economics are simple.Consider cars. Trump has long made clear that he wants Americans to pay higher prices for cars coming into the nation. On the campaign trail, he promised a tariff of 35 percent on “every car, every truck, and every part manufactured in Ford’s Mexico plant that comes across the border.” This past March, he threatened to impose tariffs on Europe’ automobile manufacturers.
But even cars produced domestically will rise in price thanks to the president’s economically illiterate trade interventions. As raw materials such as steel and aluminum rise in price, the cost of manufacturing each vehicle will rise. Manufacturers will pass those higher costs on to consumers.
Even beer and soda manufacturers are fretting about higher aluminum costs!
How to Protect Workers Without Trade Tariffs
Donald Trump’s trade war is an international tragedy. But it could have a happy ending if it eventually reminds us of the risks that free trade imposes on people, and if we improve our insurance mechanisms to help them.
.. on July 11, only 39% of respondents approved of US President Donald Trump’s imposition of tariffs on foreign countries, while 56% were opposed. But, while it’s good news that a majority of Americans oppose their president on this key issue, Trump is plunging ahead, apparently thinking the public will like the tariffs better when they are in place... So, why are we seeing so much public support for a US-initiated trade war now?It must stem from the job insecurity sometimes imposed by free trade, and the sense of injustice that arises when one is among the losers. Most people do not want charity. Voters in the United States responded well to “Make America Great Again.” They did not respond well to former President Barack Obama’s “spread the wealth around.”
.. programs such as Trade Adjustment Assistance in the US. Trade Adjustment Assistance allows people who can demonstrate that their jobs were lost to foreigners because of free trade to receive temporary compensation while they find a new job.
.. In my 2003 book The New Financial Order, I argued in favor of privately issued “livelihood insurance,” which protects against long-term loss of income and sets premiums on the basis of occupation and training.
.. if the government offers the coverage against risks to livelihoods from free trade, it just looks like redistribution. This is especially so because the risks of maintaining free trade with low tariffs may be long-term. Losing one’s job in the US steel industry as mills shut down in the face of foreign competition may look awfully permanent. But it is hard to imagine governments subsidizing displaced workers for decades.
.. with increased globalization an apparently permanent new condition, and with inequality within countries widening, people tend to feel that their long-term economic situation is getting riskier.
We need to find a way to insure people against the risks of the global market without in any way demeaning them.
.. When the government spends tax money on universal public education and health care, it does not strike many as redistribution, because the services are offered to everyone, and accepting them appears more patriotic than abject. As long as most people use the government schools and doctors, redistribution does not look like charity.
.. Another solution is to have the government encourage private livelihood insurance by subsidizing it to help cover the cost of jobs lost because of foreign trade. Private insurance companies, competing against each other and subject to appropriate regulations, may show much more entrepreneurial creativity in successfully managing the risks that free trade imposes on individuals.
.. Trump’s trade war is an international tragedy. But it could have a happy ending if it eventually reminds us of the risks that free trade imposes on people, and if we improve our insurance mechanisms to help them.