Contemporary Republican Trade Policy

A not-so-funny thing happened with the Trump takeover of what had previously been a party that stood for free trade.  Republican taxes on international trade have added additional pain to the low commodity prices that already had been weighing-upon American farmers.  

Published yesterday, a Wall Street Journal review of federal data revealed that throughout the Midwest, farmers are filing for Chapter 12 bankruptcy protection at levels not seen in a decade.       

A product of the 1980s farm crisis Chapter 12 bankruptcy allows distressed family farmers to repay creditors over three to five years. Only farms with debts that don’t exceed about $4.1 million may file for the protection.      

The numbers read like this:          

The Seventh Circuit Court of Appeals, which includes Illinois, Indiana and Wisconsin - double the bankruptcies in 2018 compared with 2008.      

The Eighth Circuit, which includes states from North Dakota to Arkansas, bankruptcies grew by 96%.        

The 10th Circuit, which covers Kansas and other states, last year had 59% more bankruptcies than a decade earlier.        

Very close to home is this:          

When Republicans levied punitive taxes on imported steel and aluminum - Mexico and China responded with retaliatory tariffs on Wisconsin cheese. This - added to already low milk prices - has contributed to a record collapse and closure of Wisconsin dairy farms. 638 to be exact.               

To be fair – US agricultural policy is a Byzantine maze of price supports and bureaucracy that both challenges and defies the logic of free markets.  Wisconsin dairy farmers seem to be their own worst enemy.  They're too productive.  An over-supply of milk has been the biggest problem.  Nevertheless, tariffs are having a significant negative impact on dairy operators.        

Over the last couple of decades US farmers and ranchers have worked pretty damn hard to grow and nurture their trade connections with China making this market one of our largest agricultural trading partners.  In response to the increased Republican taxes on imported goods last year China virtually ceased purchasing American agricultural products.  Sales vaporized and commodity prices plummeted.  When any low margin business loses a market on the order of this magnitude you get a shit storm.  Of course, this is contemporary Republican trade policy.  Government picks the winners and the losers.  And props-up the losers with piteously small handouts of welfare payments.  It is all quite socialistic, no?  It ain't your Chamber of Commerce GOP anymore.        

Of course the President will boastfully tell you that the government is reaping ginormous tariff revenues from the Chinese.  The truth of the matter is that tariffs are paid by consumers (you and me) when we purchase imported goods.  That is a fact.  I am not making it up.          

I suppose the takeaway from this bizarre immorality play is that indeed, elections do have consequences. Trump owns the GOP and the GOP owns Trump.  And all of his winning too.  Ronald Reagan is likely spinning in his grave.       

In the meantime I am striving not to be discouraged and keeping my fingers crossed for intellectually and economically honest trade policy to prevail. And hoping that those families doing yeoman's work to feed the world survive this perversity.            

You can learn more about this subject here.          

Sigh….