US-China trade war is hurting farmers, but they're sticking with Trump

Key Points
  • Recent polls show farmers strongly support Trump, even amid rising tariffs with china.
  • Experts say they're likely to stay on his side in 2020.
  • Still, it's too soon to tell how China's decision to stop buying U.S. agriculture products will affect that support.
Three numbers show how US farmers have already been hit by the trade war
Three numbers show how US farmers have already been hit by the trade war

President Donald Trump may be a resort-dwelling real estate magnate who entered politics via golden escalator, but even a trade war with China hasn't tarnished his image as a champion for an unlikely group: farmers and ranchers.

Farmers are one of the most visible casualties of the U.S.-China trade war, which escalated sharply this week as both sides landed blows that could hold potentially devastating consequences for U.S. agriculture.

Yet farmers appear to be sticking by Trump — not just the Republican they largely supported in the 2016 election, but the trade warrior who has put their industries in China's sights. And while they're far from the largest group in Trump's corner, farmers could prove to be a crucial voting bloc in the 2020 election.

The Purdue Center for Commercial Agriculture's latest producer survey, which was conducted last month and released Tuesday, showed a record-high 78% of farmers said they believe the trade war will ultimately benefit U.S. agriculture. That roughly matches Trump's overall approval rating of 79% among farmers, according to a Farm Pulse survey conducted around the same time.

I won't vote for Trump again, need to protect my business: Ohio farmer
I won't vote for Trump again, need to protect my business: Ohio farmer

That data was collected before this past week, however, when Trump said he would impose on Sept. 1 new 10% tariffs on the remaining $300 billion in Chinese goods.

Trump tweeted the announcement just after the two countries had restarted trade talks in Shanghai. He claimed China had broken its promises to buy "large quantities" of U.S. agricultural products and stop selling fentanyl.

China swung back on Monday, taking the severe step of canceling all purchases of U.S. agriculture products.

That's no small loss: The U.S. made $9.2 billion in agricultural exports to China last year according to the Department of Agriculture, making that country the fifth-largest U.S. agricultural export market.

The Treasury labeled China a currency manipulator late Monday.

"My heart sunk a little bit" after China's announcement, said Mary Kay Thatcher, a fifth-generation Iowa farmer and current farm lobbyist on Capitol Hill, in an interview with CNBC.

"That's a hard hit for us, it's going to make life difficult," she said. "Farmers are still a bit stunned about the announcement that they're not gonna buy anything."

Farmers aren't the only ones affected. Trump's battle with China over trade deficits, alleged intellectual property theft and forced tech transfers has repeatedly spooked investors around the world. And polls show that his biggest moves in the trade war — namely, slapping tariffs on billions of dollars' worth of Chinese goods — aren't especially popular with the broader public.

But U.S. soybean, pork and dairy farmers in particular have seen their revenue from China evaporate as China scaled up its own tariffs on U.S. imports, now worth $110 billion.

Chinese buyers imported $19.5 billion in U.S. farm goods in 2017, a number that was more than halved the following year as the tariffs made U.S. agriculture products more pricey, The Wall Street Journal reported.

The U.S. currently leverages 25% tariffs on $250 billion in Chinese goods. And Trump has shown no indication that he's willing to back down against Beijing, though his surrogates have suggested that the White House is willing to be flexible on the new tariffs, depending on what happens in the next round of trade talks, scheduled for September.

Kudlow: Trump is willing to be flexible on tariffs, depending on trade talks
Kudlow: Trump is willing to be flexible on tariffs, depending on trade talks

Trump, who has dubbed himself a "tariff man," has often asserted that China bears the brunt of the tariffs and that the U.S. is taking in "tens of billions of dollars" from the import taxes. But while tariffs make Chinese goods more expensive for Americans to buy, U.S. importers are the ones who directly pay the taxes.

@realDonaldTrump: Based on the historic currency manipulation by China, it is now even more obvious to everyone that Americans are not paying for the Tariffs – they are being paid for compliments of China, and the U.S. is taking in tens of Billions of Dollars! China has always....

The 2020 field

Farmers aren't a huge constituency: There were only about 3.2 million U.S. farmers in 2012, according to the Agriculture Department, a decline of 3% from 2007. But they could still prove invaluable to Trump's reelection campaign.

While he lost the popular vote in 2016, Trump eked out narrow victories in key battleground states where just a few thousand votes made all the difference. Thatcher said that farmers can be counted on to turn out to the polls.

"They're the ones showing up at these town hall meetings ... they're very politically active."

Recent census data also shows that many of the expected toss-up states export relatively little to China — some of the biggest exporters, like Texas, reliably vote for one party or another in presidential contests.

That could effectively shield Trump from taking a hit in the electoral college even if the trade war worsens.

Pennsylvania-based Democratic strategist Aren Platt said that farmers may wield an outsize influence for Trump's conservative base.

"The farmer represents this idealized rural life. And I think that a trade war with a foreign country who has an incredibly strong economy is something that rural America, rural Pennsylvania wants to see," Platt said.

Whether or not the trade war pans out in America's favor, political analysts don't foresee farmers wavering on Trump any time soon — let alone voting against him in the 2020 presidential election.

More than 75% of rural farmers voted for Trump in his successful campaign against Democrat Hillary Clinton in 2016, according to The Washington Post. They've largely remained supportive of Trump even as the trade war weighs on their industries.

"They are sticking with him," Thatcher said, adding that they largely "look at Mr. Trump as still being the better option" compared to the current slate of Democrats running for president.

"Most farmers in the rural parts of the U.S. have conservative values" and align with the GOP, said Republican political strategist Ray Zaborney. "Between their values and the president standing up for them, they're willing to give him some leeway" on the trade war.

It also doesn't hurt that the Trump administration has authorized billions of dollars in subsidies for farmers harmed by retaliation from China. A total of $28 billion has been either authorized or handed out since last year, the Journal reported.

Zaborney said that many farmers see Trump's strategy with China as a long game. But Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, believes that's a "huge mistake."

"Trump has shown many times over that he's acting on pure impulse and that he doesn't have a coherent long term plan," Bernstein said.

Bernstein recognized that farmers "still believe he's got their backs, even when they face significant costs."

But "there's a bailout in there too. We can't forget that," he added.