Name a Midwestern State, and you will find a State being hurt by Trump’s trade war.
Craig Baumann, whose family runs a 500-acre ginseng farm in Wausau, WI, didn’t have to wait long to feel the effects of the trade war. The day Chinese retaliatory tariffs went into effect he lost a new customer.
“They walked away,” he told the Milwaukee Journal Sentinel. They had a “signed contract and everything.”
Baumann is one of a number of business owners across the state, suffering from the early blows of the proliferating tariffs. Businesses all over Wisconsin are feeling the stress, with more than $1 billion in the state’s exports vulnerable due to the emerging trade war. Many of the 800,000 residents whose jobs depend on international trade could be impacted. They are the collateral damage. And the harm is about to get much worse.
Soybean prices last week fell to $7.79 per bushel, according to a Bloomberg report, the lowest in years.
“It’s been a long time since we’ve seen a 7 in front of beans for a price,” said Robb Ewoldt, whose Scott County farm in Eastern Iowa includes soybeans, corn and cattle. “That’s really scary when our break-even is $9” per bushel.
“That will affect our bottom line,” he said. That price “is not sustainable. I cannot continue to do that if I sold today.”
Bourbon is the last true signature industry for this state, Fred Minnick, the author of ‘Bourbon: The Rise, Fall and Rebirth of American Whiskey,’ told CNBC.
“When someone comes to Kentucky, they’re not thinking about fried chicken anymore, they’re thinking about bourbon,” said Minnick.
“And when you start tariffing it, when you start taking away jobs and hurting it from being exported to Spain’s, UK, Mexico, Canada, to wherever, you’re essentially gut-punching the state of Kentucky,” he added.
“I’ve been a farmer since 1951 and it looks like that maybe this might be that first year that we’re going in the red,” said Dale Edmondson, an 87-year-old farmer in southwest Missouri’s Polk County.
“We’re at the mercy of the market,” he said.
“I have survived droughts. I have survived high interests. And I’ve survived a lot of things, but I don’t know whether we can survive this trade war or not.”
The Beer Institute — a trade group that represents beer manufacturers — said the 10 percent aluminum tariff will add on an additional $347.7 million in costs for American brewers and will put more than 20,000 jobs at risk.
Potential retaliatory tariffs from other countries placed on West Michigan agriculture exports are a concern as well moving forward, said Jim Byrum, president of the Michigan Agri-Business Association.
“We export agriculture products like pork, corn, soybeans and a variety of other products, fruit products like cherries, blueberries, we export those all over the world,” Byrum said. “We are so known and so visible with our agricultural exports, when countries look at retaliation for tariffs they don’t want imposed on them, they look at United States agriculture exports as the area to retaliate.”
And on, and on, and on. In every Midwestern State, there is news of how Trump’s trade war is hurting local farms and businesses.
But here’s what’s even worse: Trump’s trade war is all based on a lie. No matter what nonsense Donald Trump spews to defend his trade war, the truth is that America was not getting killed by trade. American companies have been doing very, very well. The S&P 500 has tripled over the last 9 years.
It is workers who have not been doing well. And it hasn’t been because of trade. The problem has been that workers are being hurt by anti-union corporate executives and the politicians they have bought.
Since Ronald Reagan started the attack on unions in 1981 when he busted the air traffic controller strike, union membership has steadily declined, and with it the share of profits going to workers has declined.
The economy has been changing for decades, and union jobs in manufacturing are being replaced by non-union jobs in service, technology, etc. And this changing economy is not due to trade. It is due to technology. In fact, 85% of US manufacturing job losses have been attributable to automation, not trade.
The US did indeed lose about 5.6m manufacturing jobs between 2000 and 2010. But according to a study by the Center for Business and Economic Research at Ball State University, 85 per cent of these jobs losses are actually attributable to technological change — largely automation — rather than international trade.
If U.S jobs were being lost due to trade, then this would be because there is less being manufactured in the U.S.. However, that is not the case. In fact, the opposite is true: 7 million manufacturing jobs have been lost since 1979, yet in that same time frame, manufacturing output in the United States has almost doubled.
Manufacturing jobs peaked in 1979 at 19.4 million, according to the Bureau of Labor Statistics, and by 1987 had fallen to 17.6 million. What had been a slow decline in employment accelerated after the turn of the century, and especially during the Great Recession. Manufacturing payrolls bottomed out at fewer than 11.5 million in early 2010, and even though more than 900,000 manufacturing jobs have been added since, overall employment in manufacturing is still at its lowest level since before the U.S. entered World War II.
After adjusting for inflation, manufacturing output in the first quarter of this year was more than 80% above its level 30 years ago, according to BLS data.
The simultaneous increase in manufacturing output and decline in manufacturing jobs over the long term shows that American manufacturers have become far more productive than they were three decades ago – that is, they can produce more goods, or higher-value goods, with less labor.
Manufacturing output has almost doubled while manufacturing jobs have been cut almost in half. Why is that? Because of technological advances. And this has been happening everywhere. Not just in America. This is a worldwide change in the economy. It cannot be rolled back, nor should it be. When the industrial revolution occurred, we didn’t try to stop it and go back to feudalism.
The problem is not that the jobs are changing. The problem is that the new jobs do not have unions.
The thing is, trade, like immigrants, is being used as a scapegoat. Corporate executives and their politician mouthpieces want you to be angry at foreigners while the corporate executives keep taking a bigger piece of the pie. It is the same technique that pickpockets use. The Art of the Distraction. But pickpockets are subtle. Trump is not. And his trade war is no longer merely a distraction, it is an attack on the American economy. It is the pickpocket punching you in the face. It is no longer a pocket being picked. It is a mugging.