US farmers are “casualties” of a trade war
On June 25, US Secretary of Agriculture Sonny Perdue told CNN in an interview that the US-China trade war has impacted US farmers. He acknowledged that farmers “are one of the casualties” of the trade war. While answering a question related to President Trump’s meeting with President Jinping later this week, Perdue said, “I don’t think he’ll come home with the deal.” Perdue thinks that the meeting could be a starting point for serious trade negotiations between the US and China.
In the past year, China retaliated and increased tariffs on US agricultural products on multiple occasions. The tariffs have reduced US farmers’ income. China announced an increase in tariffs on over 300 US agricultural products in May, which came into effect on June 1.
According to the Department of Agriculture, “Some of these products are also subject to earlier tariff increases by China.” The Trump administration announced $16 billion in aid for farmers to offset the losses caused by the trade war. However, the aid might not help US farmers much if the US-China trade war continues to escalate.
In May, Deere (DE) warned investors that a reduction in farmers’ income is discouraging them from buying tractors and other farm equipment. So far in 2019, Deere stock has risen 10.0%. Deere has underperformed the Dow Jones’s returns of 14.6% positive year-to-date.
President Trump’s 2020 campaign
Last month, CNN interviewed several farmers who seem to be “running out of patience with President Donald Trump’s trade war with China.”
President Trump officially started his 2020 presidential campaign earlier this month. In a recent interview with NBC, Trump said, “I’m probably not too prepared to lose. I don’t like losing,” while talking about his re-election in 2020. However, growing anger among farmers could be a big obstacle for President Trump during the 2020 presidential election.