From the start of his presidency, Donald Trump made it clear that he wanted to save the "rusted-out" and "shuttered" factories that litter the Midwest and much of America. By calling it "American carnage" in his inaugural address, the Donald seemed to offer himself as the answer to the economic disruption that has rippled through the lives of millions of Americans.
Several months into his term, Trump put meat onto the bones of his policies by announcing punitive tariffs, starting with steel and aluminum. But now it should be clear that the negative effects of the ill-advised trade war have begun to creep into the United States business ecosystem.
GM reports that the tariffs have taken a $1 billion bite out of the bottom line. The firm once derisively known as Government Motors has also announced plans to can 14,000 workers and shutter five manufacturing plants. It's a good thing that Michigan and Ohio don't factor into anyone's presidential plans.
Meanwhile, the economic storm is hitting farmers, too. The Minneapolis Federal Reserve reports 84 upper Midwest family farm bankruptcy filings this year, the highest since 2010. The cause? Lower commodity prices. A cynic might say something along the lines that maybe we needed those Chinese markets open to soybeans after all.
Of course, there are many economic factors at play. We're well aware of the cyclical nature of the automobile business and the volatility of commodity prices. But we also know that forcing a firm to take a $1 billion hit and shuttering markets to American farmers aren't exactly the kind of steps you take to enhance the employment prospects for American workers and farmers. When soybean sales to China drop by 94 percent over one year, farmers are not better off.
The president's allies insist his tariffs are a negotiating tactic and will help the very industries they have hurt. But then, as the president resurrects a Depression-era farm bailout program, demands that GM open a new plant in Ohio and threatens to cut off subsidies that help the automaker, it's hard to believe his strategy is working as designed.
At the risk of jinxing the American economy, we should probably mention that none of this gets easier if the U.S. heads into a recession before the president negotiates the better deals he promises. In that case, we just might find out how hard it really is to win a trade war. But by then the president just might find out how hard it is to win re-election amid economic disruption.
The Dallas Morning News