Trump’s trade appeals to China still left farmers reeling

WASHINGTON (NYTIMES) – Within two years of US President Donald Trump taking office, one of his key political constituencies – America’s farmers – was reeling from his trade war with China.

Trump had waged his fight to try to eliminate the trade deficit with China and bring manufacturing back to the United States. But American farmers – among the country’s largest exporters and a key part of the president’s political base – soon became collateral damage in that effort.

Overall sales of US farm goods to China remained deeply depressed.
Overall sales of US farm goods to China remained deeply depressed.PHOTO: NYTIMES

Soybean, dairy and pig farmers saw their businesses dry up as the world’s most populous nation aimed for Mr Trump’s weak spot, putting tariffs on more than US$70 billion (S$97.82 billion) of US products in retaliation for his decision to tax billions of dollars’ worth of Chinese goods.

Mr Trump has vociferously defended his approach, saying that any short-term pain farmers experienced would be worth it once he forced China to rewrite the terms of trade in America’s favour.

But a new book by former Trump national security adviser John Bolton alleges that the president, worried about his political fortunes, personally and explicitly asked his Chinese counterpart, Mr Xi Jinping, to help him stay in power by increasing purchases of US agricultural goods.

Those overtures, which Mr Bolton said occurred in December 2018 and again last June, did little to offset an overall drop in US farm exports to China, which remain depressed at levels last seen a decade ago.

China did ultimately agree to buy US$200 billion worth of additional US goods by the end of next year as part of an initial trade deal, including US$36.6 billion of US agricultural products this year.

But those purchases have lagged significantly behind targets as the Chinese and US economies struggle with decreased demand amid the pandemic.

For soybean farmers in particular, 2020 has so far been a disappointment and has failed to reverse the steep slide in sales that has accompanied the Trump administration.

Soybean exports fell to just US$3.1 billion in 2018 from US$12.2 billion in 2017 before recovering to US$8 billion in 2019. Between January and April of this year, exports have been about US$1.2 billion, according to data from the Department of Agriculture.

Many farmers and farm groups are conservative-leaning, and they have generally been solid supporters of Mr Trump, even when his actions threatened their export markets. But in the depths of the trade war – like last August, when China announced it was halting agricultural purchases from the United States and Mr Trump threatened to tax every Chinese export to America – even the president’s more steadfast supporters began to waver.

Still, rather than back down, Mr Trump has spent heavily to shore up the farm economy. The administration announced a total of US$28 billion in aid for farmers in 2018 and 2019, funds the president says came from the tariffs levied on China. The administration secured another US$23.5 billion to help American farmers through the US$2 trillion coronavirus stimulus package passed in March.

There were indications last year that China might have been increasing purchases before pivotal rounds of the trade talks. In September, traders reported 10 boatloads of soybeans being shipped from the United States to China before negotiations that were scheduled for October. China also stepped up its purchases of US pork that month.

Mr Chad Hart, an economist at Iowa State University, said Chinese purchases of US farm goods did pick up around the time of Mr Trump and Mr Xi’s meetings – which he called a “standard practice” that Beijing used to “signal momentum” in its discussions.

“It’s something we tend to see from China in any sort of negotiation,” Mr Hart said.

Ms Veronica Nigh, an economist at the American Farm Bureau, cautioned that fluctuations in the weekly data in any year could stem from a variety of factors – including weather and currency swings – making it difficult to pinpoint whether purchases were the direct result of the Chinese government’s accommodating Mr Trump’s wishes.

Overall sales of US farm goods to China remained deeply depressed, dropping to US$9.3 billion in 2018 from US$19.6 billion in 2017 as the trade war escalated before picking up to about US$14 billion last year.

Many economists – including Dr Ian Sheldon, an agricultural economist at Ohio State University – said they were highly skeptical that China could actually fulfill the purchasing targets.

Dr Sheldon said China had made only about half as many purchases so far this year as it would need to for it to be on a pace to meet the target, although purchases could swell with harvest season later this year. Still, he pointed to economic research estimating that American farmers lost US$14.4 billion in sales in the trade war.

“I think we’re going to be hard-pressed to get back to the total before the trade war began,” Dr Sheldon said.

Dr Michael Hicks, an economist at Ball State University, said it would be difficult to recover American farmers’ inroads in China because China had made investments in other soybean markets during the trade war, particularly in Brazil.

The weakness of Brazil’s currency and the recent strength of the US dollar have only exacerbated that trend. In the years before the trade clash, American and Brazilian farmers roughly split the Chinese market. But Brazil’s share of China’s soybean market rose to 76 per cent in 2018 and 65 per cent in 2019, while US market share fell below 20 per cent, according to data from IHS Markit.

“I think part of that market just cannot come back,” Dr Hicks said.

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