All this “winning” in trade with foreign nations — loss of foreign markets and higher taxes for Americans — is becoming extremely costly. There is growing evidence that it is contributing to an epidemic of suicide among American farmers.
The situation has become even politically dangerous for the Trump administration, to the point that it has actually exempted Canada and Mexico from steel tariffs in exchange for which retaliatory measures that hurt U.S. farmers (Trump actually called them “Patriot Farmers”) are also thereby withdrawn.
It’s a small respite in all these unnecessary hostilities but not nearly enough to compensate for the disasters this trade war has caused American farmers. When you play politics with international trade, you play a very dangerous game that can result in vast collateral damage.
Working the Land
It is a literary cliche — for Americans this might have started with Thomas Jefferson — that farmers have a spiritual attachment to the land, but it also happens to be true. It is only through this awareness that we can begin to understand the suicide crisis now affecting soybean, corn, and dairy farmers who have been among the biggest losers of the trade war that has wrecked 40 years of work to develop foreign markets for their commodities.
Beginning in the early 1970s, Washington pushed for more and more production through tremendous subsidies and tax breaks. Surpluses grew and grew, but so did foreign markets, especially in China. Now these same farmers are all being betrayed as the same government forces are wrecking their markets with tariffs, driving down prices, creating hostile relations with customers, and causing many farmers to face the reality of bankruptcy and land foreclosure.
It all comes down to our old friends supply and demand. Farmers were encouraged to turn over their land to endless production of cheap carbs, only to find that this must always result in downward pressure on prices and hence profits. But there was a workaround in finding new markets through innovation and global marketing.
That worked until a new president comes along and uses the violence of tariffs to wreck trading relationships. Now with soybean and corn futures in the tank, sinking ever lower since the advent of the tariff war that would make America great, despair has set in.
In the case of dairy, the decision by the Trump administration to completely bail from a trade agreement with the Asian-Pacific region has resulted in a massive loss of foreign markets, and tumbling prices and bankruptcies.
The anecdotal evidence of high suicides among farmers is abundant. Exactly how high is the suicide rate among farmers? The Centers for Disease Control in 2016 calculated a rate twice as high as the general population, but that report was retracted based on some mismatching in profession identifiers. The reaction to this first retraction in 50 years has been mostly to call the problem of sucidal farmers a myth.
Or maybe not. We know for sure that the rate of suicide in rural areas is far higher than in urban areas. Every 12 seconds someone dies in rural America from suicide, and this rate has gotten steadily worse since 2007. There are many related factors, among them opioid addiction. But anything that fosters economic despair can only make matters worse.
The loss of a market for what you grow surely figures into this.
As a psychologist who works with farmers, and deals daily with the reality of suicide, has written:
Farmers have been calling me more and more recently because of low farm prices, the prolonged recession in agriculture.… And I do blame the Trump administration partly. Farmers are becoming dismayed about the tariffs. He knew that he needed to take care of people who voted for him, and the farm population by and large voted for him. But Trump administration policies fly in the face of what is needed for a long-term solution. I don’t understand why farmers support him, or why many people support him, because of what he’s doing to actually hurt them.
To be sure, the economic suffering of American farmers is not entirely the fault of the trade war. The financial pain for the American farmer has been a present reality for eight years as commodity prices slipped by 50 percent and more. The trade war took a vulnerable market and knocked out from under farmers their one ray of hope in international markets.
The Central Planner Gets It Wrong
Just as demoralizing is the claim by the Trump administration that it will use tax dollars to buy surplus corn and soybeans and ship it all over the world as foreign aid. It’s safe to say that no farmer believes that such a cockamamie solution holds out any prospect for fixing the problem.
It was $14 billion last year and at least $20 billion this year in bailout funds. It’s never enough. The economic fundamentals are too dire to be fixed with such makeshift solutions. Even if the scheme does work, does it really make economic sense for government to subsidize both production and consumption in a single industry solely for the purpose of waging some protectionist war against a former national market?
Bloomberg explains the situation on the ground level:
Glutted grain markets have sparked a years-long price slump made worse by a trade war with top buyer China. As their revenues decline, farmers have piled on record debt — to the tune of $427 billion. The industry’s debt-to-income ratio is the highest since the mid-1980s, when Willie Nelson, Neil Young and John Mellencamp organized the first Farm Aid concert.
So dire are conditions in farm country that Senator Joni Ernst, an Iowa Republican, and Senator Tammy Baldwin, a Wisconsin Democrat, pushed for mental-health provisions to be included in the 2018 Farm Bill. The legislation allocated $50 million over five years to address the shortfall of such services in rural areas. Ernst said she spoke with a woman whose farmer husband died by suicide. While there’s been progress on a trade resolution, the ruckus “has been very, very hard on our farmers,” she said in a telephone interview. “We’ve had such a depressed farm economy.”
Or, as the head of the American Soybean Association tells Zerohedge: “Today, If I plant soybeans, I'm guaranteed to lose $65,000 on this planting. I have to find somewhere else [to get] that money just to get me back to zero."
All of which raises the question: why would any government continue to pursue a policy that results in the very opposite of the stated purposes?
My answer: a highly confused ideology.
The End Game
Trump was very clear from his first public statements on this topic back in 2015: he believes tariffs are good for the economy. For some reason, the pundit class never took him at his word, believing instead that he was using tariffs as a bargaining chip. Now that the U.S. has bailed completely on talks with China, and Trump routinely tweets that his tariffs are responsible for economic growth in the first quarter, it is finally becoming obvious that the tariffs themselves are the end game. He will only remove them out of political panic.
While the president almost daily touts the glorious flow of revenue he is collecting from importers, and angers trading partners to the point that they exasperatedly walk away from the table and impose retaliatory measures, there is a serious human cost at the ground level.
To be sure, in the normal course of market evolution, industries come and go; it’s always a sad thing when this results in disturbed plans. But there is a huge difference between an evolving market that selects out certain professions and an industry profoundly disturbed by political violence. The loss of foreign markets is directly traceable to a misguided policy pushed for the better part of a year. Here we see the worst cause and effect in place: man’s inhumanity to man via public policy.
Tariffs are a tool of impoverishment. Poverty fuels desperation. Desperation leads to death.