Trump’s “trade war” and what it means for middle America

by Weston Baccus

Trump was elected to fix a problem that he isn’t fixing, and right now, he’s proven to America and his base that the people who elected him (middle-class America) are not getting the attention they need. America is more detached than ever before, most people don’t even know their neighbors much less the farmers 1000s of miles away that put food on our tables. Right now, the Elephant in the room is the fact that Trump’s Trade war is costing the midwest a lot of money. Soy farmers have a lot more products than they can sell, but I still think that Trump will be re-elected.

If we ended the trade war today, it would tell china that they have more economic power than the U.S. which isn’t true and when you consider the size of the U.S. economy is a ridiculous concept. The problem is that when the midwest has financial trouble, it usually ripples out to the rest of the country. The wall street journal has interviewed farmers in the rust belt and great lakes area and the consensus is that Trump’s Twitter Tirades are costing them relationships that have taken years to build. However, these farmers do not want the Trade War to end because they realize how reliant the U.S. has become in china and how unequal trade has been over the past decade. The Register (a London based news agency) found the same thing when they interviewed midwestern farmers.

The Trump administration has rolled back restrictions on Ethanol production and distribution that have allowed U.S. Corn farmers to use more of their corn for Ethanol production and sale. However, although the Trump Administration will be allowing a higher percentage of ethanol in gasoline, the EPA has exempted many oil companies from the requirement to use a certain amount of ethanol in their gasoline, and because of this reduced requirement for ethanol use, many farmers are feeling the burn. To ease the strain on the rust belt and great lakes area, large cash subsidies (about $12,000,000,000) are being allocated by the Trump administration.

In May of 2018, an article by Sapling was released, and its title was, “Analysts Think They Know When The Next Recession Will Hit”. 100 economists from Zillow were asked when they think the next recession would hit, half of them said in late 2019 and most of the others thought it would happen sometime in 2020. What did they think would be the cause? Not the trade war or inflation, but the federal reserve and monetary policies. President Trump said on Aug 22 that the fed moves like quicksand and put’s us at a disadvantage against our competition. They (economists) went as far as to say that the Fed is twice as likely as anything else to spark a recession because it has in the past.

An anomaly occurred in September that our country had never seen, the Federal Reserve lost control of its own interest rate. Interest rates on bonds had risen to over 10% in some cases so the fed was forced to lower its target rate from 2.3% to 1.88% which showed the country that Trump was right about the federal interest rate is too high, but more importantly, that the fed is losing control of the federal interest rate. Why? Companies needed cash to pay quarterly taxes and the treasury had just issued a large amount of cash which reduced their liquidity and the Iranian attack on a large Saudi oil facility cut it’s output in half which caused instability in the oil markets.

This brings me to another issue. Trump said in a poorly worded tweet, “There is a reason to believe that we know the culprit (of the attack) are locked and loaded depending on verification but are waiting to hear from the kingdom as to who they believe was the cause of this attack and under what terms we should proceed.” Most people saw this as the president allowing Saudi Arabia to control U.S. forces, which in light of the recent pullback in the north Syrian border and latitude he gave to turkey could be seen not only as a betrayal of our allies but everything we stand for. Having said that, I agree with this move at least on the Saudi front due to the implications it on oil and transportation costs. This attack greatly affected the U.S. and was a terror attack against our economy that worked very well. This event contributed to making our federal bank look weak as well as our economy as a whole.

The bottom line is that Trump has been a remarkably effective president in terms of economic policy especially as it affects the average American in non-urban areas. While President Trump has caused short term pain in the rural regions of America, the people there realize the importance of preventing U.S. dependence on china and maintain our dominance as the greatest global superpower. To prevent the decay of our farming infrastructure, increased subsidies will keep American agriculture alive through the economic tension between the U.S. and China. The economic chessboard is different from the recession of 2008 and the lowered interest rates show no sign of causing another recession. While oil prices have hit Americans in the wallet, the Trump administration is working to address the issue in the middle east and the Saudi Amico facility has already repaired the damage done by the Iranian attack. Trump has handled the economy well and has kept most of his pre-2016 promises which is why most news outlets are predicting a Trump victory in 2020.

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