October 19, 2020
Iowa farmers were struggling a year ago as Donald Trump’s trade war with China took a huge bite out of soybean exports.
Now, a year later, they’re finding buyers overseas and the soybeans they had harvested last week are heading down the Mississippi River to an export port. Even though they’re not quite back to where they were before the trade war, some are willing to overlook the headache and trouble it caused.
“The trade issues with China have not been put to bed yet, but I think Trump has made great progress and he could continue that progress if he gets another turn,” said one local Farmer, who went on to add that while he hasn’t completely made up his mind, he’s concerned that former Vice President Joe Biden might be weaker on trade.
Soybean farmers have been hit especially hard by Trump’s trade war. Exports to China, their biggest market, slowed to a trickle over the past few years. The price for soybeans plummeted and the amount in storage has reached record highs.
But China has restarted buying American soybeans just in time for this year’s fall harvest. That’s great news for farmers — and for Trump.
Farmers have consistently been among his core supporters and could prove to be key in battleground states across the Midwest where recent polls suggest the race looks to be tighter than back in 2016.
Trump has sent billions of dollars in federal assistance to farmers over the past few years, including about $23 billion in payments to help make up for losses due to the trade war and another $10 billion earlier this year to help them weather the pandemic.
Only six months ago, the farmer sentiment measure was at its lowest level in four years. The pandemic sent a shock throughout the food supply chain and many farmers had to dump produce as demand moved from restaurants to grocery stores. Federal aid helped slow family farm bankruptcies, but they were still up 8% during the 12-month period ending in June, according to the Farm Bureau. Then, the August Derecho storm leveled acres of farmland across the Midwest.
While Trump reached the “phase one” trade deal with China in January, experts were skeptical that the big purchase commitments would be met. China is still expected to come up short on its promise. As of August, China had bought just 11 of the $36.6 billion it had promised. Still, half of the farmers believe those commitments will be met.
The main goal of Trump’s trade war was to get a broader deal with China that would address what his administration called unfair trade practices, such as intellectual property theft and forced technology transfers.
But tit-for-tat tariffs put in place during negotiations targeted American agricultural products. Many of the duties remain in place, and the phase one deal did little to address those long-standing issues.
Iowa farmers received nearly $1 billion during the first round of Covid-related aid, more than any other state, according to the US Department of Agriculture, Another $450 Million has gone to Iowa in the second round, which opened on September 21.
This appears to have resonated with a lot of farmers and looks to be a key reason why support for Trump will hold within the midwest states.
Asian Markets Specialist
Susan has extensive experience trading the commodity, bond and futures markets.
She currently specializes in the Asian markets and holds a BA of Finance & Economics.
Susan is a former analyst at FXStreet but currrently writes exclusively for FVPTrade.