American farmers are being hit hard by Donald Trump’s trade wars, including his expanding conflict with China.

Farmers’ income suffered its sharpest fall since 2016 in the first quarter of this year. The drop was so significant that the Commerce Department said it was a key factor depressing US personal income growth in March, even though agricultural producers are only about 2% of employed Americans.

One-off subsidy payments compensated farmers for some losses in the last quarter of 2018, but earnings fell at an annual rate of $11.8 billion from January to March.

The loss was on top of a $9 billion drop — 12% of income —- throughout 2018.

But Trump and key advisors have not been deterred by the news. Instead, the Administration raised tariffs from 10% to 25% on $200 billion worth of Chinese goods last week, and threatened to impose duties on the remaining $325 billion of Beijing’s exports to the US.

The measure, hailed by Trump on Twitter as “BIG TARIFFS“, failed to bring any advance in US-China trade talks in Washington. Instead, Beijing responded on Monday with tariffs on $60 billion of US imports, including beans, lentils, honey, flour, corn, and oats.

The US soybean market has already collapsed, after China retaliated last year to Trump’s first rounds of tariffs.

The pressure on farmers is compounded by Trump’s proposed budget cuts for 2019-2020. Subsidies for crop insurance premiums will be reduced to 48% from 62%, and subsidies will be limited to growers with gross revenues of less than $500,000 annually.

The effects are spreading through farming communities, as local suppliers, farm equipment outlets, and tractor dealers suffer loss of business.

Trump’s Twitter Fantasy

Far from acknowledging the difficulties, Trump told the American Farm Bureau Federation’s annual meeting in January, “We’re doing trade deals that are going to get you so much business, you’re not even going to believe it.”

In a week-long Twitter campaign, he has assured “Great Patriot Farmers” that he has the solution of buying up all farm produce currently going to China and giving the crops to poor and starving people around the world.

There is no sign of such a plan by Government agencies, and no indication of how to pay Trump’s $100 billion price tag with the Federal Govenrment deficit at an unprecedented level.

Trump continued the Twitter barrage against Beijing on Tuesday, before turning to farmers:

However, he showed a sign of wavering as he implicitly acknowledged that the Chinese might not give way to his increased tariffs. He tried to shift any blame — or to seize an opportunity — by putting the burden on the Federal Reserve to lower interest rates.

China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing. If the Federal Reserve ever did a ‘match’, it would be game over, we win! In any event, China wants a deal!

Faced with the challenge of financing the Government debt and wary of spurring inflation, the Fed has withstood Trump’s pressure and insults to reduce rates.

“Taking It on the Jaw”

Meanwhile, reality is coming from farmers like Evan Hultine, a sixth-generation corn and soybean grower in Illinois.

He noted Trump’s declaration of a Government purchase of crops, but said:

Ideally we would love to have markets….

We supported him from the get-go on trying to bring China to the table and make them more accountable for their practices, but every day that this ticks on, farmers are the ones that are taking it on the jaw.

He explained, “Farm bankruptcies are up all over and, you know, we’re just not an economy that can handle this stress much longer.”

The President of the Minnesota Farmers Union, Gary Wertish, spoke of soybean farmers “getting hammered” by the trade war, with family farms and young farmers forced to quit.

Wertish noted “being squeezed on both ends”: no market for their soybeans and more expensive equipment because of steel and aluminum tariffs which Trump imposed on the European Union, Canada, Mexico, and other countries.

Tim Bardole, who runs a corn and soybean farm with his family in Iowa, summarizes: “We just keep hunkering down and doing what we can to reduce costs as much as possible, and digging into reserves, and borrowing more money and using up equity.”