Rural Michigan helped elect Trump. Now, farmers are sweating a trade war.

The Parr family has operated its farm in Charlotte since 1901, with its success dependent on Mother Nature’s whims. This year, the family faces added uncertainty due to the threat of Chinese tariffs in reaction to trade proposals from President Donald Trump’s administration.  (Bridge photo by Jim Malewitz)

CHARLOTTE — Gary Parr never quite knows what the future will hold for the crops he plants each spring at his 117-year-old family farm. That’s the norm for folks who make their living from the land.

“I’ve heard farmers described as probably the biggest gamblers this side of Las Vegas, because you put all these dollars up front, and then you basically hope for the best,” the 54-year-old said on a rainy Thursday inside his musty shop. “It’s basically all up to Mother Nature.”

But Parr this year faces an added layer of uncertainty while he works his fields 20 miles southwest of Lansing: the threat of Chinese tariffs on soybeans and corn, which grow on 900 of his acres.

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As the Midwest soil heats up this planting season, so too has a trade squabble between the United States and China. The escalating feud has blown anxiety across the 52,000 Michigan farms that fuel the state’s $101 billion food and agriculture industry.

Last month, President Donald Trump accused China of “unfair trade practices” related to U.S. technology and intellectual property and proposed steep tariffs on $50 billion in Chinese goods. China vows to retaliate — largely against U.S. agriculture.

But rural America helped elect Trump president, and Chinese tariffs of as much as 25 percent on crops such as soybeans would wallop bottom lines during tough times, farmers and economists say.  Already, China is weaning itself from U.S. beans, according to media reports last week.

“The last three or four years we’ve been down. We’re kind of struggling now to keep a break-even scenario until prices go up,” said Parr, who voted Libertarian in 2016. “While I understand the trade imbalance, it’s very difficult for me to see the ag sector take another hit when we’re already under pressure.”

Farmers and their suppliers aren’t the only ones sweating the trade talks; Certain cars and airplanes were among the 106 U.S. products China threatened with 25 percent tariffs last month. That was after China imposed levies on a slew of other items, including fresh and dried fruits, nut items, wines, pork products, steel pipes and recycled aluminum.

Most items on both lists come from agriculture, the backbone of rural economies. It’s why the retaliation is seen as a swipe at Trump’s political base. That includes communities in Michigan, a crucial piece of Trump’s 2016 election campaign, where rural voters propelled his razor-thin victory.

A March poll by the trade website AgriPulse suggests support among farmers for Trump is waning: 67 percent voted for him in 2016, but only 45 percent said they would support his reelection.

Hardest-hit Michigan counties - Counties that heavily favored President Trump also are among those that would be most impacted by proposed Chinese tariffs on crops. The proposed 25 percent tariffs are widely viewed as an attempt to undermine Trump’s base. (Source: Brookings Institute analysis of Bureau of Labor Statistics data; Michigan Secretary of State)

Matt Schwab is still a believer. He raises corn, soybeans, wheat and beef cows on 700 acres in Standish, about 40 miles north of Saginaw. That’s in Arenac County, where Trump beat Hillary Clinton by 33 percentage points.

“I’m very comfortable with what President Trump is doing. He’s just leveling the playing field,” Schwab said after parking a forklift last week. “He’s just simply trying to balance the trade deficit.”

‘Profound implications’

Michigan exported nearly $2.7 billion in food and agricultural products in 2016, U.S. Department of Agriculture data show. Canada is the state’s biggest trading partner, but China last year edged out Mexico as Michigan’s second-biggest export market for food and agriculture, buying $168 million of its products, according to the state Department of Agriculture and Rural Development (MDARD).

“Certainly, MDARD is concerned about the impact these proposed tariffs could have on Michigan producers and food companies,” Jennifer Holton, an agency spokeswoman, wrote in an email.

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Gov. Rick Snyder has “discussed with the Trump Administration the potential negative, unintended consequences tariffs can have on key industries, such as ag, and the residents who earn a living through the industry,” spokeswoman Anna Heaton told Bridge Magazine.

Policy experts say it’s tough to know precisely how much Chinese tariffs would lower crop prices, but the lost market share would almost certainly harm farmers and their suppliers.

“Farming income across commodities have fallen 50 percent in the last four years, so any retaliation could make things worse,” said John Kran, national legislative counsel with the Michigan Farm Bureau. “We don’t want any tariffs…we’re looking for new trade opportunities, not sacrificing the ones we currently have.”

Michigan’s top export crop is particularly vulnerable: soybeans, which cattle and pigs in China had gobbled amid dietary demands for more meat.

Hardest-hit states - Michigan would be among the state hardest hit by proposed Chinese tariffs on crops. It has the seventh-most workers in industries that would be affected by agricultural tariffs. Here’s a look at the top states, and how they voted in the 2016 election. (Source: Brookings Institute analysis of Bureau of Labor Statistics data; Politico)

The state exported $564.3 million in soybeans in 2016, followed by corn ($229.3 million), dairy products ($222.6 million) and various feeds ($189.8 million), according to federal data.

U.S. soybean farmers send about half their crop to other countries, and about 60 percent of those exports last year went to China.

So if China slaps a 25 percent tariff on the product — or otherwise stops buying it?

“There could be profound implications for U.S. soybean exports and farm-level losses for U.S. soybean producers,” a pair of University of Tennessee economics professors wrote in a recent analysis.

It could shrink the $21.6 billion national soybean export market by $1.4-$7.7 billion, they estimated.

How much would tariffs hurt?

Parr primarily exports to Italy and Japan. But he would be hit just as hard as any soybean grower by a market-wide plunge in crop prices caused by a loss of Chinese business.

“There’s no way it can be construed as good,” Parr said. “We spend a great deal of money to develop markets, and you never want to go backwards.”

The fourth-generation farmer said he’s used to dealing with nature’s adversity — drought and heavy rains, for instance, which are growing more extreme. (“Climate change, probably.”) But he can’t recall feeling this worried about economic policy.

Roughly half of Parr’s income comes from soybeans. Much of the rest comes from corn, which China has also threatened with tariffs. The impact on corn prices may not be as severe, because China doesn’t buy as much American corn.

The U.S. Farm Bureau suggests 25 percent tariffs would lower short-term soybean prices by as much as 5 percent, costing a farmer with 1,000 acres up to $23,300 in income.

Corn prices could fall by as much 2.5 percent, translating to a $15,400 income drop for an 1,000-acre farmer, the lobbying group says.

Schwab, the farmer in Standish, remains upbeat that demands for U.S. crops will stay strong, even if China rejects U.S. growers.

“If China wants to source their soybeans from another country, then we, the United States, would just backfill other countries who were getting their needs from, say, South America,” he said.

“As we look at worldwide demand and worldwide population…there will always be that demand for soybeans and corn.”

Paul Wagner grows corn on 500 acres in Grawn, a speck of a town just outside of Traverse City.

Leery of tariffs? Sure.

“You never want to hear the word tariff,” the 39-year-old said. “But there’s always demand, too. People have to eat, and the crop has to go somewhere.”

Kate Thiel, a Michigan Farm Bureau field crops specialist, agreed. Still, she noted, countries importing U.S. products to backfill Chinese demands would likely do so at a reduced price.

Parr, a Michigan Soybean Association board member, said he and colleagues have urged Michiganders in Congress to push for a resolution that might avoid Chinese full retaliation. He believes the politicians are listening.

“Farmers generally hope for the best and expect the worst,” he said.

Reevaluating Trump?

Parr’s farm is nestled in Eaton County, which was covered in Republican-red ink on the last presidential election map.

The farmer said he often votes Republican but couldn’t stomach voting for Trump in 2016 because of “serious issues with his character.” He instead voted for Libertarian Gary Johnson.

Gary Parr, a fourth-generation family farmer in Charlotte, grows about 450 acres of soybeans each year. That’s Michigan’s top export crop, and one that China says will see retaliatory tariffs if President Trump follows through with his own tariff threats on Chinese goods. “It’s very difficult for me to see the ag sector take another hit when we’re already under pressure,” Parr said. (Bridge photo by Jim Malewitz)

Parr said he’s trying to keep an open mind about Trump’s policies, but this trade situation hasn’t made him feel fonder. “It seems like rather than the hammer of tariffs, maybe we could good-faith negotiate and try to diplomatically do some things,” Parr said.

Wagner farms in Grand Traverse County, where Trump trounced Clinton by 12 percentage points and nabbed Wagner’s vote. Does he feel differently about Trump now?

“Let’s skip that question,” he answered after a long pause.

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Comments

Mike Watza
Tue, 05/15/2018 - 9:01am

Think. Then vote.

haha
Tue, 05/15/2018 - 9:44am

But Hillary will take my guns away!!!!

Le Roy G. Barnett
Tue, 05/15/2018 - 9:07am

It is true that farmers played a major role in making Trump President. So, when the man they put in the White House makes it difficult for them to get the workers they need from south of the border--or threatens their livelihood by possibly initiating a tariff war with China and other countries--it is hard to muster sympathy for those crying about a self-inflicted wound.

haha
Tue, 05/15/2018 - 9:42am

Trumpies too often need to learn things the hard way.

haha
Tue, 05/15/2018 - 9:43am

Trumpies need to learn things the hard way. It's unfortunate for the rest of us, who learn from our mistakes, and have some foresight.

J Hendricks
Tue, 05/15/2018 - 11:40am

We are faced with a fundamental question on trade- either we do nothing and look to a future where virtually all manufacturing moves offshore to lower wage economies, leaving America with a pure consumption economy - and the low wage jobs that support that economy (think Walmart, McDonalds, etc. ) or we take steps to level the field. And in the process of taking those steps our trading adversaries will try to hurt us and the parts of our economy that can bring pressure on our government to back off. It will be a delicate dance and some hard nosed poker playing to navigate this, but to do nothing will turn us into a simple resource provider to the Asian tiger.

David R
Tue, 05/15/2018 - 2:19pm

America is hardly moving toward a "pure consumption economy". We're currently phasing into a post-industrial economy where we're moving away from manufacturing as the backbone of the nation, and into services.

Yes, there will continue to be low-wage worker jobs that will be regionally required, but manufacturing as it relates to an industrialized economy is going away. Things like coal, steel, forestry and even agriculture. Instead, we're focusing on things like the internet, sciences, technology, green energy and business development.

That's the future, not bringing back coal and widgets.

Agnosticrat
Wed, 05/16/2018 - 6:17am

Delicate dance includes helping Chinese cell phone maker ZTE in exchange for millions in kickbacks.

P T Barnum was right... every minute.

Matt
Tue, 05/15/2018 - 12:21pm

Anyone knowing a thing about farming or other businesses knows that the Progressive Neo-Marxist left has not been a happy place for farmers and other business people, (this obviously excludes most Bridge readers)! As with many things, with two crappy choices you just pick your poison and hope the good outweighs the bad!

MPLichtman
Wed, 05/16/2018 - 10:40am

Calling people names doesn't help getting new ideas. People who are critical of what's happening in trade now may also have been critical of Democratic programs. Both sides bad mouth each other and forget to focus in on the issues at hand or share information as it becomes available and is verified.

Mary Fox
Tue, 05/15/2018 - 3:30pm

Voting for ANY Republican defies common sense. Voting for Trump defies sanity.

Mary Fox
Tue, 05/15/2018 - 3:30pm

Voting for ANY Republican defies common sense. Voting for Trump defies sanity.

Matt
Tue, 05/15/2018 - 5:18pm

Mary I suspect that if you'd like to answer the question of how much do you pay in taxes verses how much you receive in direct aid may shed some light on your question.? Things often seem to work that way.

Mary Fox
Thu, 05/17/2018 - 1:07pm

Wow what a cretin! I receive no aid, my 3 figure income comes primarily from investments. Unlike most Trumpies, I have a master's degree, support science, understand investment, and KNOW that historically REPUBLICAN POLICIES do not favor stock growth, and their deregulations BENEFIT ONLY THE RICH. THE MIDDLE CLASS, THE WORKERS, ARE TOTALLY SCREWED BY THEM. Just ask Flint and every other community reaping the toxic benefit. I do not support welfare to the rich. Take the 9.6 BILLION this state GIVES the rich in tax cuts, subsidies, and skewed tax tables, and fix the damn roads, infrastructure, and schools. You could probably have a state full of well prepared workers and businessmen who actually work for their money instead of asking me and the rest of the taxpayers to supplement then. Free trade by a Republican is not even a good joke. It is just another con.

Mary Fox
Thu, 05/17/2018 - 4:49pm

Wow what a cretin! I receive no aid, my 3 figure income comes primarily from investments. Unlike most Trumpies, I have a master's degree, support science, understand investment, and KNOW that historically REPUBLICAN POLICIES do not favor stock growth, and their deregulations BENEFIT ONLY THE RICH. THE MIDDLE CLASS, THE WORKERS, ARE TOTALLY SCREWED BY THEM. Just ask Flint and every other community reaping the toxic benefits of an all Republican government. I do not support welfare to the rich. Take the 9.6 BILLION this state GIVES the rich in tax cuts, subsidies, and skewed tax tables, and fix the damn roads, infrastructure, and schools. You could probably have a state full of well prepared workers and businessmen who actually work for their money instead of asking me and the rest of the taxpayers to supplement them like we are responsible for making their businesses solvent. Free trade by a Republican is not even a good joke--just a trickle down lie that anyone with half a brain sees through.. It is just another right-wing con. Lastly if the best you can do is attack me personally when you know NOTHING about me, you might turn off whatever is feeding you this nonsense, and repair your logic and your brain.

Anonymous
Tue, 05/15/2018 - 5:55pm

Farmers overwhelmingly voted for Trump. (Mr. Parr sounds like a rare exception.) During his campaign, Trump promised to cancel trade agreements, impose tariffs, and disrupt trade in general. Trump is keeping those promises. Why are farmers complaining? When they do, why do they complain about everyone and everything besides than Trump? And when they fail so spectacularly to relate their problems to the true cause, why do they expect anyone else to sympathize, get behind their efforts to correct the problem, or even care?

Joe
Tue, 05/15/2018 - 7:00pm

I'm a little lost, how will China feed its people and keep the factories and slave labor going? Its a pissing contest between the US and China and they will make a deal at some point. But good job keeping people in a state of fear.

Huckster
Fri, 05/18/2018 - 12:51pm

You forgot to mention the drought in China 5 years ago that caused a spike in beans and corn. Farmers received higher prices for crops shipped abroad as well as prices in the U.S. Prices go up and down, but people will always need food. This is common supply and demand principles.

Daniel Schifko
Sun, 05/20/2018 - 12:56am

Once again Phil Power and his left of progressive writers spin against common sense and logic. If we continue to let manufacturing of the disposable goods we consume be done elsewhere we had better learn to speak some dialect of Chinese. If we continue to be afraid to change things for the best interest of America we can only lose. China has been stealing our technology and manufacturing secrets for over forty years. They have been wondering when the American people were going to wake up and vote for a leader that would stop this one sided relationship. Are you too ignorant to know that Americans import Chinese product to under sale their fellow Americans? The only way that we can have a healthy economy is when we all are gainfully employed. Selling each other Big Macs and cell phone service won't create any wealth. Pull your collective academic heads out of your rear ends and try to understand how economies work. When all we have left are service sector jobs we will be dependent on foreign countries for our basic goods. Farmers are like any other industry, sometimes the individual calls it right, sometimes they bet the wrong way, but that is the nature of their industry. And to spin your fear story into anti Trump rhetoric? You don't believe you are changing any minds, do you?

Cecelia Rose La...
Mon, 05/21/2018 - 6:08pm

Before the land was opened up to White rural farmers it was Anishinaabe owned in what everyone calls Michigan - which translates to "big and out of cloth" in our language. Although as Europeans descended on free and cheap land we were moved into small reservations as a form on an extermination policy. It is amazing we are alive today as Anishinaabe people!

Its easy who is getting the freebies. White folks. They will deny it but that is a part of settler privilege. Why don't tribes buy up land? There are many colonial legal loopholes and white tape to go through. They make it really tricky for us if you haven't noticed.

In the 15th century, simultaneous with colonial expansion and slavery was land privatization in Europe. "Private land" is a White European patriarchal concept. So Europeans were evicting their own and raising rents.

I live in Anishinaabe Aki (Northern MI) and the people who should have 100% access to the land should be us as the Anishinaabe people. As Native American/First Nations we are the minority of all minority in the world. This concept is hard to conceive for most people - even other people of color. We are invisible to most. I don't have much compassion for White farmers who have access to the lands that were ours for a very long time. Educate yourself beyond the mainstream and the mind control box of television.