President Donald Trump’s trade wars are pushing the United States rural economy towards a full-blown meltdown after years of financial hardship, causing more farmers to default on loans while placing the squeeze on agricultural lenders.
Farmers have seen their net income plummet by half since 2013 and are now anticipated to hold almost $427 billion in debt this year — the most since the farm crisis within the 1980s. The default rate for farm loans held by banks hit its highest level in seven years within the first three months of 2019.
In Iowa earlier this month, Trump blamed his predecessors who “did nothing” about falling farm income, while crediting his personal administration for “turning it throughout.”
Except he hasn’t. Instead, his trade battles have accelerated the deterioration of financial circumstances. Retaliatory tariffs from main trading partners like China and Mexico have slammed U.S. farm exports and taken a chunk out of commodity costs. And soaring debt levels are pushing an increasing number of farmers and ranchers — already suffering from epic floods — towards insolvency.
Equally worrisome for some farm economists is the prospect of a slowdown within the broader U.S. economy. As commodity costs have fallen and farming has become less profitable, many producers are dependent on non-farm income to stay afloat and continue to service their debt.
Kimberley, the Iowa farmer, stated the financial headwinds converging on agriculture have created the “most unpredictable, uncertain period” for farmers since the 1980s crisis.
“Farming always has ups and downs,” he stated. “However I think this one’s off the charts.”