Much like the hog farmers in Iowa who fear economic fallout from Chinese retaliation against President Donald Trump’s steel and aluminum tariffs, soybean farmers who stood fast by Trump through the election are wondering if they made a poor choice.
According to The Washington Post, soybean prices took a dive Wednesday on the news of China’s response, and even with a rebound, the overall situation might not bode well for farmers.
In the hours after China floated a levy on soybeans, futures prices dropped 4 percent, or 40 cents, to $9.97 a bushel. That price is approaching the break-even point on many farms, said Arlan Suderman, chief commodities economist at INTL FCStone.
Long term, the prospects are even worse. Although soybean prices rallied Thursday morning, they were still down more than 20 cents. And even if prices stabilize, tariffs will erode farmers’ Chinese market share, said Wallace Tyner, a Purdue University economist who has modeled the likely effect of the tariffs. Within three to five years, Tyner's model shows, Brazil and Argentina would replace the United States as China’s main source of soybeans. That could force U.S. farmers to switch to less lucrative crops, such as corn or wheat.
Farmers The Post spoke with were pleased to hear that Trump wanted to balance America’s trade relationships, but they were not so fond of the way the president is going about the process.
Bret Davis, an Ohio farmer who voted for Trump in 2016, counts on foreign markets as most soybean farmers do -- China buys about 60 percent of American soybean exports.
“The way he’s going about this is not the way I would’ve done it,” Davis said. “My way would’ve been talking about it first, rather than just [imposing tariffs]. But Mr. Trump’s way to deal with anything is to throw a diversion into a room and then sit down and talk about it.
“It’s worked with some things,” Davis added.
Bill Gordon, a farmer in Minnesota, told The Post that it seems like Trump is shoring up the steel industry at the expense of American farmers:
“The administration needs to understand that the livelihoods of 300,000 soybean farmers are important,” said Gordon, who also voted for Trump. “Not that the livelihoods of steelworkers aren’t. But how can we justify helping steelworkers at the expense of so many farms?”
Gordon said he lost this year’s gains with the price drop Wednesday and will be faced with a break-even season if it doesn’t rebound soon.
Still, the farmers are waiting to see what happens before they pull their support from the president.
As for Davis, the Ohio farmer, he’s waiting and watching the president — for now. He believes the high-stakes brinkmanship is a way to get China to the negotiating table, where Trump will advocate for rural Americans, as he promised on the campaign trail.