Despite Billions in Relief Payments, American Farmers Are Still Hurting From Trump's Tariffs

An economist explains how the trade conflict with China continues to harm American farmers as well as the overall economy.
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Farmer Terry Davidson walks through his soy fields on July 6th, 2018, in Harvard, Illinois.


The Trump administration plans to give American farmers and ranchers hurt by the current trade war $12 billion in emergency relief to mitigate the impact of tariffs on their exports.


If the trade conflict with China continues much longer, it will likely leave lasting scars on the entire agricultural sector as well as the overall United States economy.

A Tit-for-Tat Trade War

How did we get here?

In January, the Trump administration placed tariffs on Chinese solar panels and washing machines to protect U.S. manufacturers. It followed that in March with tariffs on all imports of steel and aluminum—citing national security concerns. Though many countries were subsequently exempted from the U.S. import tariffs on steel and aluminum, China was the primary target.


China is the second-largest export market for U.S. agriculture behind Canada, which means it's no surprise that such goods made up the vast majority of the more than 600 products that have been targeted by China with tariffs of 15 percent to 25 percent in two rounds of retaliation. Among them are cotton, wheat, dairy, wine, fruits, nuts, soybeans, and pork—to name just a few.

Caught in the Crossfire

Since China's tariffs only recently took effect and more retaliation could happen, it's still too early to fully understand the potential damage. But U.S. farmers and ranchers are bracing for the worst.


Thanks to the 25 percent tariff on U.S. soybeans, Chinese importers have been canceling contracts with American farmers for later in the year and buying more from Brazil—which is expected to soon be the world's top soybean producer.

A recent study suggests that, if the tariffs stay in place, U.S. exports of soybeans could fall 24 percent to 34 percent, while production could decline 11 percent to 15 percent.

The extent of the impact depends on whether U.S. soybean farmers are able to find new markets for their crops. In addition, because China consumes so many soybeans—which it primarily uses for livestock feed—it probably can't cut out U.S. producers entirely. Chinese importers will simply have to pay more for U.S.-sourced soybeans to meet domestic demand.



While many U.S. pork producers may be able to find new markets for their goods, that probably won't be the case for offal, which are pig parts such as organs and entrails. Chinese consumers consider offal a delicacy, while it is just used an input for pet food in the U.S. The tariffs have already eroded U.S. exports of pig parts to China.


If the trade war escalates, the harm could get even worse. For example, China is the biggest buyer of U.S. exports of animal hides—which haven't yet been hit by retaliatory tariffs but could be in another round. And the impact is being felt across the U.S., with at least some workers in pretty much every state affected by agricultural and other tariffs.

Trade Conflict's Long-Term Impact


As the tariffs make the cost of U.S. crops and meat go up for Chinese customers, they'll begin to import products that are relatively cheaper from other countries such as Brazil.

China might also drive up its own domestic production of certain products—such as pork—thus depriving American farmers of the export market. Or, in the case of wine, U.S. producers were already at a disadvantage to their French and Australian rivals. A prolonged trade dispute could limit American winemakers' exports to a promising market.

If American agricultural producers can't increase exports to other countries to make up for lost sales to China, farm incomes would most certainly fall. And even if they do manage to find new markets, perhaps with the help of the new government aid package, it'll be hard to make up for the world's largest market for food imports.

Will the Aid Help?

As for the Trump administration's promised aid package, the U.S. Department of Agriculture said on July 24th that it would divide $12 billion among three programs that will:

  • Provide payments to producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs
  • Develop new export markets for farm products.



Damage to a Market


In my experience as an economist rooted in agriculture, U.S. farmers and ranchers prefer to be able to sell their goods to consumers around the world rather than receive government aid because of a trade war in which they've been caught in the crossfire. They want their government to help them find more consumers, not turn them away.

This article was originally published on The Conversation. Read the original article. Amanda M. Countryman is an associate professor of agricultural economics at Colorado State University.