American farmers are losing money and going bankrupt across America. Farmers don’t treat money the same way as you and me. You see, farmer’s business is their farms and as such to improve their business they re-invest in them. What does that mean? It means that while we put money into savings accounts in order to risk starting a business or save up for retirement, farmers put their profits into their tractors, mills, machinery, and land. Any extra funds then go towards paying off the interest and gaining equity from the banks who ultimately own these very expensive pieces of machinery. Machinery they absolutely need to compete with large farming corporations. So if farmers ever experiences a loss in their expected profits from a famine or *tariffs*, then they won’t be able to balance their budgets and will start defaulting on their loans. Generally when there is a famine the government responds with subsidies to keep farms solvent so they can keep America fed the following year. But there isn’t *any* response if farmers begin the go bankrupt because of tariffs (except for a bailout).
So, what actually is a tariff, anyway? If Trump is putting tariffs on China won’t that make America get what it wants? Isn’t it hurting China and helping us? No. Emphatically, no. A tariff is a TAX. Let me repeat that. A TARIFF IS A TAX. It’s just a fun word to replace the hated word of ‘tax’ with a slightly more ambiguous one that isn’t universally hated. Is that a tax on China? No, it’s a tax on America. Whenever an American company imports goods from China, they have to pay a tax to the federal government of the United States in order to do it. China doesn’t pay it. Americans do. (and then the money gets funneled into Mar-a-Lago) If you don’t know tariffs you might wonder why we would ever use them then. Basically tariffs are meant to encourage domestic manufacturing or material sourcing by making it slightly more prohibitively expensive to get goods from overseas. Let me give you an example. Let’s say it costs American companies 2$ to make (after parts and labor) a box of pencils. That box was made in America by American jobs and the profits and benefits of selling it go to Americans. Now China can make the same box of pencils and ship it to America for 1.80$ a box of pencils. Naturally, in order to save money, consumers are going to buy the Chinese box of pencils. And for some things, like making plastic cups (or a box of pencils, really, but this is just an example), America has no problem with that. If China can make it cheaper and then save Americans money then absolutely we should buy the Chinese box of pencils. However for industries that America’s economy is competing for – like technology and green energy – we want America to have the advantage to encourage more businesses in America to work in that industry and create profitable world-changing technological innovations. So, back to the box of pencils. Now let’s say for this example that the box of pencils is our technology sector and the American government wants to protect it from being devalued by Chinese imports. This means that the government would then put a 10% tariff (a tax on American businesses importing goods) on pencil boxes from China, making both cost 2$ at market. Now, when consumers go to the store to buy a box of pencils, they can choose either the American pencil box or the Chinese pencil box depending on their personal preference rather than a difference of price. (Personally, I always go for the American ones. Help out your fellow Americans if the price difference is small. Go America 😛 ) Naturally, if a tariff is put on Chinese goods then Chinese businesses also suffer repercussions. If Chinese goods suddenly have to compete with American goods in the American market at the same price, then the amount of goods they planned to export and sell will no longer have nearly as many buyers. This means they’ll have supply leftover from unsold goods and not enough demand which will devalue the price of their pencil boxes domestically and abroad in other nations beside the US. The tariff will cause them to eat a loss they otherwise wouldn’t have expected. This is exactly why when tariffs are raised unfairly – either too suddenly or too high (Imagine if we put a 20% tariff on the pencil box. Now it costs 2.20$ so no one will buy it) – then China will have no choice but to fight back in hopes that the tariff will be lowered to a rate that is much more fair. This is generally going to be retaliatory tariffs on American goods being exported to China. For this example, the pencil boxes we were hoping to sell in China were just made more expensive. This back and forth of tariffs and retaliatory tariffs (a very obvious consequence of creating unfair tariffs) is known as a trade war. This is what is currently happening between the US and China.
The Trump administration has been pretty upfront about how much he hates just about every American trade deal that he didn’t make. This very much includes the one between the US and China. In order to force China to make concessions in a trade agreement between China and the US, he implemented high tariffs on Chinese imports. How high? To the note of about 50 billion dollars. He accomplished this by using part of the Trade Act of 1974 that “authorizes the President to take all appropriate action, including tariff-based and non-tariff-based retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce“. Ignoring that this breaks the rules of the World Trade Organization (WTO), the rationale for the tariffs is to combat Chinese intellectual property (IP) theft against nations across the world. China routinely steals ideas and technology around the world and then creates their own version without any concession given to the inventors or innovaters. This substantially devalues the contributors to the advancement of society and humanity and is absolutely not an acceptable practice by any nation. Every member of the WTO agrees that this needs to stop and the litigation and mechanisms to do so exist and are currently being worked on. (Sort of. It technically resumed January 1st but it was suspended by the US and I’m not sure what is coming of it.) So rather than combat China’s IP theft through the WTO and our allies (or any number of alternative measures), Trump instead started a trade war. As a consequence of this reckless action, China has stopped importing soybeans from America. Before Trump took office America was exporting about a billion bushels to China which made up about 75% of the the soybean export market (China outspent every other country combined three times over on US grown soybeans). There are about 60 pounds in a bushel of soybeans. This means that American farmers were expecting to be able to sell 60 billion pounds of soybeans and were able to export NONE OF IT.
As a result, American farmers across the country are now going bankrupt and are having their land, farms, homes, and assets (million dollar farm equipment) repossessed by banks as they default on their livelihoods. Billionaires, foreign companies, and large farming corporations are buying up all the devalued lands. Many of these corporations have direct ties to the Trump administration. Big money is beating out independent farms across the country and household farms are rapidly disappearing. These same corporations which want to sell America the most corner-cutting products they can sneak past the FDA to increase their profits are now gaining an increasing control over the food and nutrition that keeps Americans alive, fed, and productive. Meanwhile farmers who’ve owned their lands and farms for years are destitute with little recourse but to lose everything at auctions to everyone looking to gain at their expense. Some of the lucky exceptions are able to buy their farms at auction, but only rarely. This is the destruction that lies in wake of Trump. His narcissism fueled his need to make the best deal and we’re the ones paying the price. The burden of his failures is not only destroying the lives of farmers but it is being paid for by the taxpayers. Trump gave 12 billion dollars in a federal bailout to the farming industry he destroyed. But it’s not enough. Farmers don’t want welfare paid for by taxpayers to fund Trump’s failure. They want the trade war to end. They want a real solution.
I have some progressive reforms that can help farmers, the environment, and all Americans; And I encourage you to read about them and please give me feedback on how they can be improved. Thanks for reading.