Apr 5, 2018 - Economy

Soybeans are an unlikely political ground zero in Trump's trade war

Soybeans, a crop almost exclusively produced by farmers in the GOP's rural base who voted overwhelmingly for President Trump in the 2016 election, are a key inclusion on China's list of 106 U.S. products that will be subject to retaliatory tariffs.

Data: Department of Agriculture; Map: Chris Canipe/Axios
Data: Department of Agriculture; Map: Chris Canipe/Axios

The bottom line: In 2016, soybeans accounted for 12% of U.S. exports to China, per MIT's data. And American farmers ramped up production of soybeans in part because the Chinese were buying in such massive quantities. Now, that source of revenue is in jeopardy.

The backdrop...

  • Politically-motivated tariff retaliation isn't new, Thomas Duesterberg of the Hudson Institute tells Axios. "The Europeans have become experts at that. Everybody's learning from them," he says.
  • When then-President Bush announced steel tariffs in 2002, the European Union threatened retaliation aimed at Florida, a sensitive state for Bush. Now, the Chinese are using moves against U.S. agricultural products and manufactured goods, such as automobiles and planes, to hit Trump's core voters.
  • Kirk Leeds, CEO of the Iowa Soybean Association told the Des Moines Register: Tariffs create "a lot of market disruption at a time when farmers can't afford any disruptions ... For farmers on the edge, this could be very detrimental."

Yes, but...

  • Trump is fulfilling a campaign promise — that he'd be tough on China — made to industrial workers in his base. And "there are a lot more of those people than there are farmers ... That's probably the political calculus that Trump is employing here," says Duesterberg.
  • And the farming community has ways of seeking recourse, he says. Many American farmers stopped growing corn and wheat in favor of soybeans as the Chinese market grew, and they have the option of switching back.
  • Farmers are also protected by price floors on agricultural goods — a market advantage industrial workers don't have. Secretary of Agriculture Sonny Perdue tweeted: "The president has assured me he won't let our farmers bear the brunt of China's retaliation."
  • "You've also got to understand that Trump is going to get support from the other side of the aisle on this ... That mutes the damage to him to a certain extent," according to Duesterberg.
Go deeper