Analysis Politics
Farmers pay the price in a trade war
Will it be Trump or Harris? America is not the only country in the grip of this question. Rural voters could well be the deciding factor and will certainly not be ignored by the presidential candidates. The generally more conservative rural population is traditionally more Republican. However, two major growers' organizations are concerned about Trump's economic plans.
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Choose the subscription that suits youMarket protection and import duties have been a major theme in this US election campaign. China in particular is being criticized by Trump. He wants a 60% tariff on goods from China and at least 10% on goods from other countries. Countries that trade with America will not let this go and will come up with countermeasures. A new and tougher trade war than in 2018 and 2019 (Trump's first term) is looming, according to economists. The American farmer could end up paying the price, warn the American Corn Growers Association (NCGA) and the Soybean Industry Association (ASA).
Price drop up to 10%
The ASA and NCGA have calculated what it would mean if China reacted to a US import tariff with a 60% tariff on US corn and soybeans. Compared to the current situation, US soybean exports to China could fall by more than 50% and nearly 90% less corn would be exported. This would not be without consequences for the prices of these crops in the US. The interest groups expect a drop of $1 per bushel for soybeans (soybeans are currently around $10 per bushel). This would be a major blow to US farmers, who have suffered the largest drop in income since the 7s in the last two years. According to the groups, the rural economy loses more than $XNUMX billion per year due to a tariff on corn and soybeans alone.
China does need soy and corn, but will, the unions fear, turn to South America for that. Brazil in particular will benefit from that. There is room to grow in area there and due to higher prices due to extra demand from China, growers also have the means to invest in that.
If Trump were to actually implement all of his plans for import duties, the average duty would be 17,7%, the conservative Tax Foundation has calculated. That would be the highest rate since 1934. The Tax Foundation draws a parallel with the Smoot-Hawley Tariff Act of 1930. At that time, import duties were also imposed to protect the domestic market. World trade collapsed due to the protective measures, thus worsening the great crisis of the XNUMXs.