In all conflicts, there are innocent casualties. In the case of the tariff war between the United States and China, it’s soybean farmers and many others. Toy sellers, for example, buy many products and parts from China, and they are facing the need to dramatically raise prices as the holidays approach.
Tariffs levied against other nations result in similar circumstances for industries from construction to automobile manufacturing. In addition, the on-again, off-again nature of many tariffs has lent an air of uncertainty to many markets.
Bailouts for farmers?
But the Trump administration is considering bailouts for farmers, not toy sellers and the other small businesses teetering under the pressure to either raise prices, cut employees or downsize.
When governments pick winners and losers, it interferes with free markets and places loyalty or ideological support ahead of efficiency and supply and demand curves.
Selective tariffs interfere with markets as well. And now it appears that tariffs will lead to selective bailouts.
Only a year ago, conservatives were criticizing the Biden administration for favoring green businesses through lending initiatives.
“The Biden-Harris administration talks about creating an ‘opportunity economy,’ but the only opportunities seem to be for radical left-wing climate groups,” Sen. Joni Ernst, R-Iowa, a ranking member of the U.S. Senate Small Business and Entrepreneurship Committee, said at the time. “The levers of government should never be used to pick winners and losers based on political priorities.”
We agree, but it ought to cut both ways.
A bumper crop
There is no question that America’s farmers are hurting, and at a time when many are experiencing bumper crops. Tariffs on Chinese imports have led China to retaliate not only with 23% tariffs of its own on U.S. soybeans but also by largely refusing to buy soybeans at all from the United States. Instead, Chinese buyers are turning to South America, specifically Brazil and Argentina. U.S. farmers, anxious to sell mounting harvests, are turning to countries such as Bangladesh, which offer much smaller markets than China. As a result, surpluses are accumulating and market prices are falling.
Not surprisingly, soybean farmers, as well as farmers of other crops, are hoping for some sort of relief, and President Donald Trump is seriously considering providing it — at the estimated cost of between $10 billion and $15 billion.
Some will argue that these bailouts represent just a fraction of the money Mr. Trump’s tariffs have generated. This is true. The Peterson Institute for International Economics estimates that, through July, the administration’s tariffs have raised $122 billion. CNN, citing more recent Treasury numbers, reported that tariffs had raised $190 billion into October, a 160% increase over last year.
Just as significant as the money raised, however, is the money lost through diminished trade, resulting in layoffs or fewer consumer choices for Americans. Any bailout from Washington ought to provide broad support for a variety of industries.
Immigration crackdown
But tariffs aren’t the only concern for American farmers. The crackdown on undocumented immigration has made it difficult to hire the laborers who typically help harvest crops. Citing figures from the Bureau of Labor Statistics, Politico estimates the nation’s agricultural workforce fell by 7%, or about 155,000 people, between March and July. The Pew Research Center estimates a drop of 750,000 from January through July.
Like it or not, many farmers prefer undocumented workers because they are easier to hire for temporary work, requiring less paperwork than the hiring of citizens. Politico spoke to some affected farmers in Pennsylvania.
One, a dairy farmer and member of the Pennsylvania Farm Bureau board, said, “People don’t understand that if we don’t get more labor, our cows don’t get milked and our crops don’t get picked.”
The answer here is for Congress and the president to agree to allow temporary work visas that let people easily cross the border for temporary farm work, and then return home.
We understand the need for higher tariffs in some situations, such as when dealing with belligerent nations that engage in unfair tactics. But it’s time to pause and take a clear-eyed look at the nation’s overall tariff schedule, its goals and its unintended victims, and to consider immigration laws in regard to agricultural labor.
Clearly, current rules are not aimed solely at other nations. They hurt American businesses too. And when subsequent bailouts are aimed solely at a few of those affected, it only adds to the casualties.