Trade rifts with other countries borne by the Trump Tariffs signed by Donald Trump in January 2018, is now taking its toll on U.S. farmers. Wall Street Journal (WSJ) recently reviewed federal data pertaining to the Chapter 12 Bankruptcy Protection extended by US courts to farmer or fisherman families. The results of WSJ’s review revealed that the rate by which US farmers have filed for Chapter 12 Bankruptcy Protection, has soared.
District Courts covering the states of Arkansas, Indiana, Illinois, and Kansas, among others are seeing sharp increases in petitions for bankruptcy protection. The Eight Circuit Court of Appeals shows a swelling of numbers by 96%; the Seventh Circuit garnered twice the number of petitions received when compared to the 2008 figures, while the Tenth Circuit saw a 59% increase from what they had a decade ago.
The Bankruptcy Trend is Expected to Transpire in Other Business Sectors
Initially, the sets of tariff imposed on importation of solar panels and washing machines, and later on steel and aluminum, seemed far from creating adverse impact on the agricultural sector. However, as the exports of foreign trading partners suffered a blow from Trump’s importation tariffs, their nation retaliated by also imposing import tariffs on US products entering their respective territories. Retaliatory actions came not only from China, but from EU member countries, Canada, and Mexico.
Exportation of US homegrown agricultural products like soybeans, coffee, oranges and other produce such as pork, dairy and whiskey, just to name a few, has become less competitive. Retaliatory import tariffs had weakened the trading positions of US agricultural exporters.
The trade rift with China turned into a full-blown Trade War, when Trump announced in July 2018 that all Chinese products and goods purchased by U.S. businesses from China will be meted with 25% importation duties. The value estimated at $50 billion worth, all the more created an impasse. Trump’s move only increased the cost of materials and components used by US manufacturers in assembling or in producing their goods.
Although negotiations are currently underway, US farmers and other affected businesses are not seeing enough income that will allow them to recover from ballooning debts; or even in continuing their operations.