Mined from the notebooks, Thursday, April 5, 2018. Posted Monday morning, April 16.
“In this March 26, 2018 photo, pigs belonging to Jeff Rehder stand in their shed, in Hawarden, Iowa. Rehder stands to lose potential revenue on his hogs after China responded to Trump's announced plans to impose tariffs on products including Chinese steel, with a threat to tag U.S. products, including pork, with an equal 25-percent charge.” AP Photo by Nati Harnik via the Des Moines Register.
The market’s up. It’s down. It’s down, it’s up. It’s up some more. It’s down again. It’s down by a lot. It’s back up again, by a lot, but it’s still down. I think. Who can keep track? And who cares? Not me. Not Trump’s voters.
Trump’s voters---the ones anybody seems to care about, the ones political journalists still seem to think are the only people who voted for him and continue to cheer for him---the good, hardworking blue collar and middle class (and only incidentally white) folk of the small towns and modest suburbs in America’s Heartland, wherever that is---any place liberals don’t live, I guess---they don’t care about the stock market. They don’t have much if anything invested. What they do is through pensions and 401k’s that they don’t expect to see them comfortably through their retirements, if they even get to retire. Most of them don’t completely understand how the market actually works. Few of us do. That’s how financial planners, stock brokers, hedge-fund managers make a living. They’re paid to understand it for us. Which is why they need to be strictly regulated by the government. Somebody has to keep an eye out so they don’t take advantage of our lack of understanding. But most of us understand at least that the market contributes to our making a living, that somehow, some way, some of the money finds its way into that part of the economy that keeps the businesses and institutions that employ us running. Trump’s voters most likely understand this too, in a vaguer and resentful way. Understandably, though, they’re focused on the coupon clippers, trust fund dependents, and corporate executives who pocket most of the gains. And if the market crashing thanks to Trump starting a trade war means those people are screwed, good!
And I can’t say I’m not with them on that. I have only the foggiest idea how the stock market works myself, let alone works to my advantage. It’s hard to understand how an apparently profitable company can increase its stock price doing things you’d think would hurt its business---close stores, close offices, close factories, lay workers off by the dozens, hundreds, thousands! You might suspect they’re really in the business of increasing their stock prices, an enterprise serving no purpose except to make its already richest and largest stockholders richer. I can explain it to myself but it’s purely an intellectual exercise and I don’t come away from the argument with myself convinced. What I feel is that it’s a rigged game played by sharpers using other people’s money to get rich no matter if they win or lose.
Trade’s another matter. Trade is easy by comparison. You can see it happening. You can map it. Get the exact numbers. You can track where your product’s going. You can count the money as it comes in. A truck pulls up to your farm. You load your hogs, you beans, your corn, and wave goodbye.
So Trump starting trade wars is something folks whose livelihoods depend on international trade---soybean and hog farmers whose markets are in China, for example---is something you’d think would make those folks mad.
When China threatened a 25 percent tariff on soybeans, Mike Petefish, who grows the crop over 2,000 acres, feared the worst. Soybeans are a $2 billion business in Minnesota.
“A 40-cent drop in soybeans, like we saw on Wednesday, meant $50,000 of value evaporating out of my bottom line,” said Petefish, the 33-year-old president of the Minnesota Soybean Growers Association. “The last time I talked to our banker, he told me that of all his clients — these are all farmers — only four made money last year. We kind of broke even. But this year was looking tough even before the tariffs.”
-------------------“It’s going to hurt American farmers, no doubt about it,” said Jarous Valenec, a 43-year old dairy farmer who attended one town hall. “We were already looking at depressed prices for corn and soybeans before this. There’s no sector that’s showing good numbers.”
Brad Te Grootenhuis sells about 25,000 hogs a year and could lose hundreds of thousands of dollars if the tariffs spark a backlash from China. He said it's possible he would abandon Trump if pork's price decline continues and lasts.
"Any time you're losing money, nobody's happy," the 42-year-old farmer said. "I've got payments to make, plain and simple."
Sioux County seed dealer Dave Heying echoed a common refrain that any downturn in the farm economy would curb spending throughout the local economy, with direct impact on farm machinery dealers, mechanics and agricultural construction, among other businesses.
"Protecting our U.S. industries is important, but my concern is, at what expense to the farmer?" Heying said of Trump's trade moves. "It is too early to say whether or not I would support him. These types of decisions give you hesitation."
For hog farmer Tim Schmidt, the fallout of a geopolitical spat with China would force him to hold off on any new construction or maintenance on the decades-old buildings on his family-run farm along the Missouri River.
"There is an uncertainty to exactly what the next two to three years are going to look like," Schmidt said. A Trump voter in 2016, Schmidt said that if "things are bad and someone better comes along, we're willing to take a look."
Maybe it’s just typical reticence---farmers know not to let themselves get worked up over things beyond their control, like bad weather and politicians making dumb decisions---but they don’t sound all that mad. They sound concerned. But not real concerned. The farmer in this story from WHO-TV in Des Moines even flatout denies he’s concerned. He’s sure things will play out to his advantage:
STATE CENTER, Iowa -- "I'm not concerned right now," said Randy Hilleman of Hilldale Pork. "I think we'll have to see how it plays out."
Hilleman raises hogs at his farm in State Center and has been a pork producer for half a century. He said he likes the fact that President Trump is shaking things up in Washington because America doing business as usual with other countries wasn't working.
"You can't ever have everything just status quo," said Hilleman. "We've been importing a lot of everything from China and some of the quality of the stuff isn't the best. But you can't have the same agreement just go on and on and on and let everything just go."
While some may fear the U.S. is entering a trade war with China, Hilleman looks at President Trump's tactics as practicing the art of the deal…
"I just don't like how Washington's been run," said Hilleman. "That's why I voted for Trump, because I want somebody in there that's a businessman and not a politician. And I think it might hurt us in the short term, but I think in the long run that it'll be better."
End of Part One.