Contrary to President Trump’s claim that tariffs are good for Americans, domestic businesses have suffered from the ramifications of the president’s protectionist trade policies over the past few years. In addition to the historic unemployment rate caused by COVID-19, these tariff and trade restrictions continue to hamper economic growth. In Virginia, the fallout from these policies, such as rising costs and damaged trade relationships, have weakened businesses and agricultural producers across the state. As the Trump administration focuses on economic recovery, it should not persist in maintaining protectionist policies that hold Virginia back.
It is unfortunate for Virginians that the President’s number one enemy in his protectionist crusade, China, is also Old Dominion’s biggest trading partner. Since 2016, China has been Virginia’s number one source of its imports and number two destination for its exports.
While many of China’s actions merit a serious U.S. response, waging a trade war with the state’s top trading partner has caused substantial damage to local businesses, especially to agribusinesses, Virginia’s largest private industry. Agricultural exports to China fell from $691 million in 2017 during Trump’s first year in office to $235 million in 2018 after the imposition of tariffs. For many owners and workers across the Commonwealth’s 43 thousand farms, the decrease in exports has led to less production and lower prices, which means lower income and fewer jobs.
For example, soybeans are the Commonwealth’s main agricultural export to China. However, when the U.S. imposed tariffs on various Chinese products, China retaliated by slapping a 25 percent tariff on American soybeans. As a result, Virginia’s soybean export to China decreased by 98 percent from 2017 to 2018, and the total production of soybeans in Virginia dropped by 23 percent from 2018 to 2019. The price of a bushel of soybeans fell from $10.70 in early 2018 to $8.50 by the middle of 2018, which was the lowest point in 10 years. Due to the drop in production and prices, Virginia soybean farmers have experienced a dramatic cut in their income.
The cause and the seriousness of this decline are clear to state officials. The commissioner of the Virginia Department of Agriculture and Consumer Services, Jewel H. Bronaugh, stated that the recent decline of Virginia’s agribusiness was mainly due to the trade tension between the U.S. and China. Senators from Virginia, Mark Warner and Tim Kaine, joined the other Members of Congress who stood up against the president’s protectionist trade policies. They issued a statement that condemned the president’s tariffs: “Trade wars yield no winners and hurt consumers and producers all over the Commonwealth, especially the farmers and small business owners who count on Chinese demand for products grown in Virginia.”
The administration does at least recognize that its trade policies have had negative impacts on farmers, but the relief program it established could backfire. President Trump created a $12 billion program to offset the damage the U.S.-China trade war has done to their businesses. Contrary to what the president intended, however, federal farm payments could be in violation of U.S. trade obligations and lead to even more retaliatory tariffs.
The harmful effects of President Trump’s protectionist trade policies go beyond the agricultural industry. The 10 percent aluminum tariffs that the president imposed raised the cost for people like Chris Smith, co-founder of Williamsburg’s Virginia Beer Company, to run their businesses. It is small business owners like Smith who bear the cost of the tariffs. His aluminum can distributor increased the price by over 25 percent since the tariff was imposed. Regarding the president’s tariffs, Smith said, “We eat the cost ourselves, which isn’t easy. I hope it comes down soon.”
The president’s aluminum tariffs have prompted the European Union to slap a 25 percent retaliatory tariff on American whiskey. This harmed small distilleries in Virginia, like Purcellville’s Catoctin Creek Distilling Company. The founder of the company, Scott Harris, planned to expand his business to Europe, but the retaliatory tariff has “essentially decimated” his European opportunities.
The ongoing pandemic is not the only impediment to America’s economic recovery. The president’s trade policies and the resulting foreign retaliation continue to cripple U.S. businesses. If the goal is to revive the economy, then reducing tariffs and ending trade wars would be one of the first steps toward that goal.