-Source-The Washington Post-
Hours after President Trump’s tariffs on Chinese goods took effect July 6, China retaliated, leveling equivalent tariffs on a wide range of U.S. goods — including agricultural products.
The tariffs and China’s reaction have sparked a political debate. Trump has proclaimed that “tariffs are the greatest!” Vulnerable Democrats running for reelection in red states aren’t as enthusiastic. They argue that farmers — especially soybean farmers — are the first victims of the administration’s trade war. Trump says Europe will pick up the slack in demand. Plus, he contends, the tariffs were a necessary adjustment, claiming that incomes and commodity prices were falling well before he took office.
We previously looked into the president’s tweet, but the two starkly different assessments caught our attention, and we thought a closer look was in order. After all, how can the president’s tariffs be both savior and disaster?
The Facts
Prices for agricultural products are shaped by a plethora of forces, including the number of plantings, global trends, weather and what happened the year before.
U.S. agriculture experienced a “golden period” from 2011 to 2014, according to Mary Marchant, a professor at Virginia Tech’s Department of Agricultural and Applied Economics. She pointed out that supply and demand lined up in favor of U.S. agriculture during those years, producing big profits. Farm income began to decline in 2013 (not 2003 as Trump suggests), and the decline continued through 2016 as “increased plantings, combined with good weather, led to record U.S. farm production.” In other words, there was more supply than demand. Read more
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