Makenna Green, 18, is a 2019 high school graduate and a proud contributor to her family's Illinois soybean and corn farm.

How the Trade War with China Is Hurting U.S. Farmers

The John Deere tractor has long been a symbol of farming in the U.S. Its signature bright green and yellow colors are often silhouetted against a grand expanse of field or crop, emerging from dust clouds with motor rumbling and blades spinning.

That’s why on May 17 it was most telling when Deere & Co., the farm supply company that makes and sells those tractors, threshers and much more for the agriculture industry, announced a cautious financial forecast and dwindling earnings. The company cut earnings and sales growth projections for 2019 and reported second-quarter earnings that came in under estimates for a fifth straight quarter. What’s more, it is cutting production by 20% at two of its largest factories. This financial news all points to one thing: U.S. farmers are struggling.

An ‘Agvocate’ for Her Industry

In states like Iowa, Nebraska, Minnesota and Illinois, where the economy depends heavily on the farming business, many farmers can’t afford these days to buy new John Deere equipment. The Morning Brew business newsletter points to three main reasons for this: technologically improved fertilizer and seeds that have led to a global oversupply of crops, driving prices down and resulting in less money for farmers selling what they produce; bad Midwest weather that delayed planting; and the escalating trade war with China.

This third factor has been dominating recent headlines. Last week, China said it planned to raise tariffs (government taxes on imports and exports) on $60 billion of U.S. goods as retaliation for U.S. President Donald Trump’s previous move to hike tariffs on $200 billion of Chinese goods. As each country makes its latest move, the fallout continues, for businesses and the U.S. stock market. Amid trade-war tumult, the Dow Jones Industrial Average plunged more than 600 points in a day, the worst one-day drop since January.

America’s Farmers are casualties of this trade war. Prior to the trade war, China and Hong Kong combined were the second-largest export market for U.S. pork. Chinese pork buyers have cancelled thousands of metric tons of U.S. pork orders in the escalating tariff exchange of the last few weeks, eroding the $6.5 billion market for American pork. China is also the No. 1 global buyer of soybeans. Throughout this tariff exchange with the U.S., China has capped U.S. imports of the product. That is to say that the country is limiting shipments of soybeans into its markets from the U.S.

In a recent opinion piece, Davie Stephens, president of the American Soybean Association, said, “Trade is the lifeblood of the U.S. soybean industry, and right now it is ebbing away as soybean growers are unduly caught in the crossfire of the U.S.-China trade war…the effects of the prolonged trade war have already caused soybean prices to fall to levels at which any sale only locks in a loss.” Millions of Chinese consumers, who once bought about 60% of American agriculture exports, have stopped buying their products. Added Stephens: “As we plant our 2019 crop, unsold soybean supplies are expected to double before harvest begins in September, further depressing prices and forcing older farmers to consider retiring early to protect their equity and younger ones to look for other careers.”

Makenna Green, 18, says she is not going anywhere. As the sixth generation to grow up and live on her family’s row crop farm in East Central Illinois, the recent Arthur Lovington Atwood Hammond High School grad is headed to Lake Land Community College in Mattoon, Illinois, this fall to work toward an advanced degree in crop science.

Green’s family business, Heritage Family Farms, specializes in corn and soybeans. A member of the FFA and a dedicated farmer, Green has been closely watching the tariff wars over the past few years. She says that she is passionate about agriculture and regularly “agvocates” for the future of farming in America.

Green has had to learn a lot about tariffs and trade to understand how these global economic negotiations are affecting her family’s livelihood, and to speak out with an educated voice. “When China raises their tariffs, it costs more money to market a product to China and vice versa. In reality no one wants to pay that extra money, which in the end closes off the market,” notes Green, who stresses that she agrees with President Trump’s trade approach, but not his timing in an already-fragile agriculture economy.

“We export or sell a bunch of agriculture products to China. With their already high tariffs, and even higher tariffs after this trade war, there is a decreasing market to China,” adds Green. “The problem is that American farmers are really good at what they do. We produce a surplus of products. This decreasing market coupled with a surplus of products means that the prices on our supply and demand-driven markets are not going to be good. Right now, the prices are so bad that many farmers are not even making their break-even prices, meaning they are losing money on their crops. Farmers are struggling. Big time. In the beginning the idea that we would get better prices and deals for our exported goods was something that many farmers in my area believed could be a good thing. At this point, though, farmers are losing hope.”

Taking a ‘Hit Through It All’

Scott Ashby, 17 and a rising senior at Carroll Jr. Sr. High School in Carroll County, Indiana, is a third-generation family grain farmer. He says that the open land in places like Carroll County, which has 13 hogs to every two people, allows for a lot of farming diversity with crops as well as livestock. As a member of the FFA, Ashby believes he has a duty to inform people about the issues that affect farmers. “Almost everything in the world can be related back to agriculture,” he says. “One decision can impact the entire world. You get a year like this with high rain values in Indiana and farmers have to push back planting. The next thing you know, not only does the nation but the entire world see higher prices due to the shortage of corn, soybeans and wheat that we failed to produce.”

“Everyone needs a farmer every day all day for food, fiber and fuel. Without this industry, no one would eat.” — Makenna Green

While the U.S.-China trade war impacts farming decisions that Ashby and his family make every day, he points out that their awareness of the global economic climate is a fundamental part of their job. “The U.S. farmer has been affected by the tariffs for a number of years through many different administrations, from things as simple as increased prices on over-the-counter parts at the dealership, due to shipping tariffs and importation costs, to reduced commodity prices. Farmers have taken a hit through it all,” notes Ashby.

Surviving in the agriculture business means learning to adapt – and cuts costs, he adds. “We have responded to the trade war by holding our equipment over longer periods of time instead of trading up, along with doing more repairs ourselves or hiring outside mechanics not affiliated with a dealership to cut those costs,” Ashby says. “We are also holding our grain for a longer period of time trying to wait it out for higher prices.”

The U.S.-China trade war has spotlighted the struggles of farmers in the U.S., and both Green and Ashby want their generation to understand what hardships in agriculture mean for the country and the world. “Agriculture is the largest industry in Illinois and is one of the largest in the country. One in four people will go into a job related to agriculture,” says Green, who was chosen as a national finalist last year in grain-production entrepreneurship. “Everyone needs a farmer every day all day for food, fiber and fuel. Without this industry, no one would eat, and the United States’ economy would struggle. Times are tough now, and getting tougher. This is making coming back to the farm less and less attractive for young farmers. This is scary as the age of the U.S farmer is on the rise. We need farmers! We need family farms! They are the backbone of America and keep food on our tables and clothes on our backs. If we don’t support farms and keep their doors open, it’s hard to tell what will happen to the entire economy of the United States and the world.”

Ashby echoes those sentiments, and adds that he believes in the foundation of farming as family businesses working and prospering through a connection with and appreciation for the land. “There will always be a future in agriculture; the only thing that concerns me is what that future looks like,” says Ashby. “We already see big businesses infiltrating everything we do, from Monsanto buying out all of the competition across the globe, to companies such as Red Gold investing in their own ground and hiring farmers to tend to and produce a crop off of it, while [Red Gold] collects the main profits. There are also issues like mislabeling of consumer-related goods, such as General Mills saying that their wheat is non-GMO, while in fact wheat has never been genetically modified. Also, it is legal to label lab-grown meat as real meat, when by the Merriam-Webster dictionary, the term meat is defined as the flesh of an animal (particularly mammal) used as food. Ag may never look the same if we do not do our part to cure these myths and set the story straight about what agriculture truly is.”

Conversation Starters

Scott Ashby says, "There will always be a future in agriculture; the only thing that concerns me is what that future looks like. We already see big businesses infiltrating everything we do." There are two sides to this argument. Some would say that technology and big business are improving farming in lots of ways, not hurting it. Using the Related KWHS Stories and Related Links tabs accompanying this article, explore how the agriculture business is changing. Discuss with a class or in a group.

Did this article teach you anything about the agriculture business? What did you learn? What questions do you still have?

Are you a member of the FFA? If so, what do you want the world to know about how the trade wars are affecting industries in your country? Log in and share your experiences and insights in the comment section of this article.

9 thoughts on “How the Trade War with China Is Hurting U.S. Farmers

  1. The tension between the two powerful countries has no doubt caused many problems in both countries, including the impact on U.S. farmers. Even though I feel like some sort of response needs to be made to China on the trade war, Trump’s way of doing it doesn’t seem to be working. His tariff on $200 billion Chinese goods is paid for by the people in America who bought those goods. As a result of Trump’s tariff, China is cutting down shipments of some goods, including soybeans, from the U.S. China’s $60 billion tariffs on U.S. goods didn’t do America any good, either. There must be another way of solving this problem without harming the people.

    1. The trade war did cause many troubles to both countries. But to be honest, in the area of agriculture, American farmers are suffering more.

      The benefits contention between two biggest countries in the world can have an extremely effect. China has the most population in the world which is almost 1.4 billion in total. Therefore, food is the first problem that China need to face. As a Chinese, I have to say that it is obvious we cannot support all the food ourselves. With many reasons, America and China have already traded crops for many years and it helped both of the countries. However, these days with the influence of trade war, US was not the biggest exporter of China anymore. Instead, Russia is the biggest one, now. And there are some evidences showing that China may have long-term cooperation with Russia such as COFCO invested 400 million dollars to buy several new ports in Russia for transporting crops. Moreover, through the data of SOHU, actually, soybean from Russia to China have filled the gap of American soybean support. Same things happened in other crops, too. In short, all of this caused many problems for American agriculture but did not influence Chinese too much.

      I cannot tell whether President Trump made a rational decision or not. However, as the student told in article, the war happened in wrong time. I firmly believe public are innocent in the war and everyone, no matter Chinese or American, wants to make money and have a peaceful life.

      Like what Xinyu L. said “There must be another way of solving this problem without harming the people.”. I totally agree it and I also believe that:
      “Follow the WTO rules of economics and trading.
      Use negotiations to solve problems.
      Cooperate and mutual benefit. “
      These can actually make a better trading and business environment for every country.

      I hope everything will be better in the future. China and US can solve problems, work together and endeavor to build a better world.

  2. Regarding the trade war between China and the US, big business taking over agriculture is not a good idea. Merging of big business and technology can have a hugely negative effect on the US economy and agriculture. The power of improved technology and big business combined can lead to mass production and oversupply, which happened to be one of the main causes of the Great Depression. Even though the government and/or big business may exercise control over production, there may be other losses to consider such as a decrease in production, unused lands and unemployment.

    By reading this article, I learned that US agriculture and farming are currently experiencing some difficulties. I also learned about the existence of the FFA, an organization which supports students who are interested in becoming our farmers of the future.

    One questioned posed is: Can the US win this trade war? My answer is ‘no.’ China has a larger population and a larger domestic market; therefore, their economy may be able to withstand the negative consequences of a trade war with the US. However, US agriculture depends mostly on exports, and the US also has a significantly smaller population. To put it bluntly, should the US lose the trade war, they have much more to lose; considering this, China can call the US’s bluff, holding out for much, much longer.

    Even if the US wins, the loss they would likely experience would be huge and hard to overcome. Additionally, there is the question of whether or not the US can bear the loss and produce enough within its borders to supply its country. And would waging this war be worth the risk of suffering such a potentially monumental loss?

    In order for the US to win the trade war, they would need to reduce production to meet only the demands of their domestic market. Another question: Is the US willing to take a severe hit by decreasing both production and cutting the accompanying employment in order to enter the ring and fight with China?

    The article also tells the stories of farmers, and is, at times, very touching. I have to wonder, is the US government going to provide subsidies for these farmers? Are they going to provide financial support?

    The US should provide help for students who are part of FFA to ensure a new wave of farmers —arguably our most valuable profession—are able to achieve their aims.

    1. Hayoung, I found your broader economic analysis of the trade war from the perspective of both China and America particularly intriguing. Even your more focused analysis on the undesirable effects of big business and technology in agriculture was interesting and further developed a pressing issue that the article pointed out.

      While there is much to commend on your analysis, I have to disagree with some of your conclusions. First, you claim that big business taking over agriculture is not a good idea. But good and bad are less relevant adjectives than inevitable in this case. The agriculture industry has been dominated by big business and technology since the 70s, and will continue to be due to the simple concept of economies of scale. Commercial agriculture that streamlines the process and invests capital into expensive equipment will always be able to produce cheaper crops and more crops than family farms, meaning more profits. While there is a demand for niche agricultural products (non GMOs, sustainable, pesticide free) that only small businesses will be able to deliver, the presence of commercial agriculture will remain.

      Ultimately however, in context of the trade war, the distinction between commercial agriculture and family farms is not relevant. Across the board, farmer’s incomes fell 11.8 billion dollars within the first 3 months of this year because of the trade war. Your point on the troubles that an oversupply of crops has is very true, and you’re correct in mentioning the role it had in causing the Great Depression. Whereas a free market provides sufficient demand to balance this oversupply and keep farmers profitable, the trade war upsets this balance. Makenna Green describes the effect of the trade war: “This decreasing market coupled with a surplus of products means that the … the prices are so bad that many farmers are not even making their break-even.” You ask whether the government will provide subsidies. In this case I would hope so, since a possible solution to the damages caused by one government action is another corrective action. As FDR did during the Great Depression, the government could subsidize farmers to produce less, thus inflating the price and providing farmers increased capital through subsidization.
      But the essence of your response, and the part that intrigued me the most, falls on the question of whether the US can win this trade war.

      Your economic analysis on the trade war was robust and thoughtful, but you come to the conclusion that the US cannot win, at least not without suffering enormous economic losses. To an extent, I agree. From an economic standpoint there can be no winner of this trade war. In the US, Dow tumbled almost 600 points as fears of trade war escalated and the anecdotal stories of Davie Stephens, Makenna Green, and Scott Ashby speak for themselves on the damage done to the American economy. And despite China’s notoriously inaccurate or inaccessible economic health statistics, the US was China’s biggest buyer of exports so this trade war is definitely hurting China’s economy.

      But the aspect of the trade war you overlooked is the political side. The economic question was ambiguous, harming both the US and China. But from the standpoint of global influence, only the US has to gain.

      China was unchecked on the international trading field, bullying international trade partners to reveal intellectual secrets, stealing intellectual property from American companies, subsidizing its companies to grown them and gain influence, and increasing its hegemony by loan sharking developing nations. All the while, America was in a 419 billion dollar trade deficit putting 419 billion more dollars into their economy than China put into ours. The trade war is a response to that.
      The US is one of the few nations that has the economic muscle to withstand a trade war with China while also being able to inflict any damage against China. As mentioned before, we are China’s biggest buyer, and without us, China is forced to turn to less profitable alternatives like Russia during a period where it was experiencing rapid economic expansion. This is a less than favorable situation for China, not only because it places accountability on a previously unchecked actor, but also because it simultaneously reduces the trade deficit America has with China that creates long-term economic benefits.

      The short-term effects of the trade war are harming small businesses and the farmers of the agriculture industry and this warrants subsidization or some other government interference to correct. Yet it is easy to make generalizations when we have only witnessed the short-term effects. In order for a more comprehensive understanding, it is important to recognize the long-term potential they have from a less economic standpoint, a long-term potential that only the US stands to gain from.

      Whether president Trump exhibited uncharacteristic foresight or characteristic serendipity with the imposition of these tariffs, the resounding answer to your question “Can the US win this trade war?” from a perspective that extends beyond economic: yes.

  3. When scrolling through the articles that I wanted to comment about, this one definitely sparked some interest. Last year I competed in the Agribusiness event in the club Future Business Leaders of America (FBLA). While initially, I wasn’t that interested, slowly with time I became fascinated with the technicalities and specifics associated with running an effective business related to agriculture. While I managed to place 7th at nationals, the more important thing I gained was a deep respect for all the people who contribute to America’s agrarian backbone. Before looking into the more specific effects of the trade war, a more general point that I gathered from the article and my prior experience, is that the threats that many farmers are facing toward their livelihood are threats to the survival of mankind itself. It is very easy for many people to simply discount the struggles that those who are employed in the field of agriculture face as trivial and unimportant, but it is critical to realize that without a stable production of food, none of humanity’s other pursuits are even possible.

    The trade war serves as a perfect case study of how, if used improperly, government corrective measures can end up hurting the demographics that they were designed to protect. The tariffs that were put in place by the Trump Administration were created because of the trade deficit that occurs between China and the United States. The goal was that the tariffs would create a fair deal for American citizens. However, as the article clearly shows, a whole class of people are suffering. While it would be a mistake to call the tariffs a failure solely because farmers have been negatively affected, it is fair to point out certain weaknesses it has. This also shows how important trade and globalization is to a whole class of Americans. While free trade benefits every inhabitant of a country through cheaper prices and better-quality goods, a farmer’s entire livelihood is improved through the vastly larger market that free trade provides. One of the positive developments that has helped farmers in recent times has been the signing of free trade agreements such as NAFTA (1994) and the defunct TPP (2015). One of my favorite economists of all time, Ludwig Von Mises, very eloquently said: “From the purely economic point of view nothing speaks against free trade and everything against protectionism”. Mises and many of the other Austrian Economists were incredibly supportive of the free passage of goods as they saw the benefits to the consumers and producers. It is also fascinating that this whole article in many ways debunks the idea that only big corporations benefit from unrestricted trade. The rhetoric that surrounds the imposition of the tariffs is that the common man benefits while large corporations pay their fair share. While it is true that more commercial farms have appeared with the passage of time, thousands of operational family farms still exist. Moreover, these same family farms and family owned businesses are the ones that suffer the most from tariffs and restrictions of free trade. Unlike larger companies, small businesses do not have massive profit margins or large cash reserves. This means that any increase in price threatens their survival as whole. Within the article itself, student activist Greene states: “Right now, the prices are so bad that many farmers are not even making their break-even prices, meaning they are losing money on their crops”. A salient point that should be derived from all this is that the passing of a law in Washington can cause a dramatic change for thousands of Americans all over the country. All actions have consequences, and in order to make wise economic decisions, one should try to compare possible negatives to the potential advantages. Another thing to consider is that in order to have a nuanced discussion, people should not jump to absolutes. In this case, it is not fair to call Trump’s Trade War a failure to the American People or a reestablishment of American hegemonic dominance by just looking at one of its effects. In this case, it is not fair to call Trumps Trade War as a failure to the American People or a reestablishment of American hegemonic dominance by just looking at one of its effects. If you look on the other side of the issue, the trade war had some legitimate reasons to start in the first place. The main reasons were the theft of American intellectual property, which costs the country $225 billion to $600 billion yearly along with the massive trade deficit between the US and China. This to say that while it would be a mistake to call the tariffs a failure just of the fact that farmers have been negatively affected, it is fair to point out certain weaknesses that they have.

    When it comes to solutions, there are no easy answers. While certain measures like providing subsidies to farmers that ensure that they don’t go bankrupt are useful, they’re merely temporary bandages upon the laceration that is the problem the farmers are facing. When presented with the challenges of the modern world, we as a people must remain aware of the wide impact of legislation and look at the issues objectively. Both Makenna Green and Scott Ashby should be revered as the icons of teen activism because of their ability to clearly articulate the plights that farmers across the nation are facing. One thing is for certain: if passionate and informed citizens (like Makkena and Scott) work together with legislators and world leaders, a viable and a sustainable solution is within reach.

  4. It is very inspiring to see young people carry on the torch in a profession that today’s generation often does not view as glamorous or rewarding. Makenna Green and Scott Ashby’s insights into the combination of factors affecting the agricultural industry were well thought out and articulated. In my opinion, this advocacy is and will continue to be critical in convincing our peers to support this industry.

    Now more than ever the agriculture industry requires an influx of new ideas and technology from small businesses in order to keep it competitive and prevent large corporations from taking over the market. The kind of oligopoly this could produce, similar to the state of the airline industry, would prevent competitive pricing and likely drive food prices higher than even the current tariffs have made them since there would be fewer players in the market. It could also make the barrier for entry into this business extremely high since farmers would require large amounts of capital to pay for the machinery that such big businesses can utilize.

    Especially intriguing in this read was Green’s comments on her agreement with the government’s trade policies but her disapproval with its timing in this already fragile industry. However, it seems as if any tariffs the government placed on China would inevitably have resulted in this negative effect on agriculture. I think the reason for this is because China deliberately chose agriculture as the target of their retaliation due to its strong dependence on competitive pricing and relative instability. Seeing as we are in the midst of a bull market and the Dow is almost the highest it’s ever been, the government understandably agreed that now was the best time for these tariffs if any. However, if they had come to the conclusion that agriculture would inevitably be the effect of China’s retaliation, they could have considered that agriculture’s contribution to GDP was highest in 2016 at 22%, and has been declining ever since. 2016 might have been the missed window for this trade war.

    Ultimately, I think that the government should pay better attention to their defense in this trade war rather than their offense. By that I mean they must support the people who are suffering from China’s retaliatory tariffs. Whether that is through subsidies or increasing the money set aside for bailouts ($18 billion in 2018), farmers shouldn’t have to take on the brunt of the retaliation alone. Ashby’s cost-cutting methods to survive the tariffs are effective but not long-term, and in this perfect storm of a trade war as well as difficult climate conditions, support must be provided to small business farmers like Heritage Family Farms, so the backbone of our economy may survive.

    1. I agree that if a tariff war exists, avenues of helping alleviate the consequences that farmers bear the brunt of should be explored. However, considering the already massive U.S. debt, and the fact that the budget is already tight as it is and adequately funding relief efforts would be extremely difficult, what do you think are some methods that the government can fund this through?

  5. Whenever we look at trade wars and any situation in which tariffs are implemented and used as a form of political retaliation due to disagreements with foreign countries, we should remember the purpose behind trade in the first place. Trade, in essence, is favorable towards all participating entities- it makes sense that individuals or countries on a larger scale can focus on the production of goods in which they have a comparative advantage in producing, and trading it for other goods which they would be comparatively inefficient at producing. Although tariffs can be viewed by some to be potentially useful as a short-term political incentive to achieve a certain policy, the institution of long term tariffs, especially a “tariff-war” ultimately is not only ineffective but ironically opposes what is in the interests of both nations.

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