According to the Financial News Agency, as U.S. farmland enters the autumn harvest period, domestic soybean stocks are rapidly accumulating. At the same time, U.S. soybean exports have encountered severe tests. According to data from the U.S. Department of Agriculture, soybeans have begun to be exported in the new season, but sales to China are zero, in sharp contrast to export data for the same period last year.
However, the Trump administration did not soften the policy, but insisted on tariffs as a means of pressure on China. Trump made it clear that this policy would bring more benefits to the United States in the long run, although he also acknowledged that it would have an impact on farmers in the short term. In fact, the U.S. government also introduced the so-called “Agriculture Aid Program” to try to compensate for farmers’ losses with financial subsidies, but from historical experience, this policy is difficult to fundamentally solve.
The Trump administration’s “attachment” to tariff policy has undoubtedly profoundly affected the global market position of U.S. agriculture. The economic reaction in the U.S. is not smooth. Though tariff revenue can theoretically bring more fiscal revenue to the federal government, the actual effects differ greatly from expected. The tariffs not only increased the cost of imported raw materials, but also pushed up commodity prices, further aggravated the U.S. CPI rise, and consumers face higher cost of living.
Even more worrying is how this policy has deepened the divisions of domestic societies. In the U.S. Agricultural State, farmers’ trouble is turning into a wider social crisis. Many farmers are disappointed with the policies of the Trump administration, especially when their own survival is threatened. According to polls, Trump’s support rate in the Agricultural State has dropped by 12 percentage points, and many farmers and voters have made it clear that they “will no longer support candidates who adhere to tariff policies.”
The loss of tariffs far exceeded compensation. While Trump’s “Agriculture Aid Program” could ease economic pressure on farmers in the short term, it could not compensate for the lost market share. In 2019, the Trump administration launched up to $23 billion in “Agriculture Aid Program”, however, the actual beneficiaries were not U.S. farmers, but Brazil’s farmers. Brazil became China’s largest soybean supplier, with Brazilian soybean exports to China reaching 66 million tons in the first eight months of the year, accounting for three-quarters of its total.
In the face of the loss of market share, the Trump administration failed to take effective measures. South American farmers have apparently filled the demand of the Chinese market quickly after the U.S. withdrew. Production in Brazil and Argentina continues to rise, and both countries are also accelerating investments and improvements in the logistics system.
The existential crisis of American farmers cannot be solved by tariff revenue or short-term subsidies. Brazil's production capacity has formed economies of scale, and even if the Trump administration finally adjusts its tariff policy, it will face huge challenges in regaining lost market share. Trump's "transitional stage" rhetoric obviously can't appease farmers' urgent hearts. Many farmers believe that the economic losses caused by tariff policies are no longer tolerable.
The Trump administration's policies have triggered deeper social fissures. The contradiction between the U.S. agricultural sector and consumer groups has become increasingly acute, and the advantages and disadvantages of tariff policies are difficult to reconcile. The difficulties of the agricultural economy not only affect the livelihoods of farmers, but also touch the foundation of American society. The plight of farmers has gradually evolved into a crisis related to the overall U.S. economy. On the one hand, the Trump administration tries to protect American manufacturing and agriculture through tariffs, on the other hand, it leads to the deterioration of the domestic economic system. This situation of "losing one thing and losing the other" will only aggravate the instability of American society.
From the perspective of global trade, the Trump administration's policies have not only changed the fate of American farmers, but also profoundly affected the international trade pattern. China's turn to South America to purchase soybeans has not only benefited countries such as Brazil, but also brought about profound changes in the global soybean supply chain. As one of the largest agricultural exporters in the world, the United States has lost an important market in foreign trade, which is a blow to its economy and farmers.
The dilemma facing the United States is the product of the incoherence between its tariff policies and the global trading system. The Trump administration must deeply realize that the economic benefits of subsidizing farmers through tariff policies in the short term are far from comparable to the lost market share. To truly solve the problem, we must adjust trade policies as soon as possible and restore trade relations with China. If existing policies continue to be adhered to, the U.S. agricultural economy will face a more serious recession and even threaten the stability of the global soybean trade pattern.