President Trump Proposal to Counteract China and Big Club/Big AG Strategy…

Today President Trump outlines an approach to head-off the anticipated retaliation from China over the increase in U.S. tariffs that began today. Whether this is structurally possible, or whether this is Trump’s attempt to diminish the leverage carried by Vice-Chairman Liu He, is an interesting question. However, the strategy is clear.

Overall U.S. inflation remains low relative to the economic gains from MAGAnomic policy. [Current CPI HERE].  GDP and wage growth are both exceeding inflation. As such, now is indeed the best time to confront China. President Trump notes this today in a tweet:

Inflation in the U.S. remains low overall at 1.8%…. now is the perfect time to hit Beijing with expanded tariffs.  However, President Trump knows China will retaliate through the multinationals on Wall Street.  President Trump knows China will specifically target the U.S. Agriculture sector. China will likely attempt to put pressure on Trump by refusing to buy U.S. farm product. The BIG AG multinationals will go bananas.

The BIG AG multinationals, those who control food/farm production, also control key Senators; they have been purchased through lobbyists. This is part of the Big Club approach/strategy.  Wall Street and the U.S. Senate will be aligned to support China; as a consequence President Trump needs to counteract their effort.

President Trump’s approach to counteract China’s strike against the U.S. agricultural community is visible in a series of tweets today.  I don’t necessarily agree with the proposal long-term, BUT I do understand the short-term objective…. optimum expediency.

As you can see, President Trump is proposing to counteract the Chinese boycott of U.S. farm product, by using income from the Chinese tariffs to purchase the farm product.  It would appear the U.S. Dept. of Agriculture, Secretary Sonny Perdue, would be in charge of the program.

In the short term this would mean the corporate income losses from BIG AG multinationals would be offset by U.S. purchases.  The Dept. of Agriculture would purchase harvests that exceed the domestic U.S. supply need.  President Trump is proposing we then give that harvest to nations who need food: “poor and starving countries”.

In essence income from the tariffs on China would be used to subsidize U.S. farmers.

Perhaps as a short-term, optimal solution, this is a good plan.  However, the downside is the U.S. food prices, what you pay at the grocery store, will remain artificially elevated.

If there was no intervention, domestic farm production would far exceed internal U.S. consumer demand.  This would mean prices on U.S. food products would necessarily drop (rather quickly).  The supply would far exceed demand.

This over-production dynamic is caused by more than 25 years of BIG AG growth, where multinationals have contracted with U.S. farms to grow and export food product.  We’ve talked about this corrupted and “controlled market” system extensively here on these pages. [Go Deep]

The process of multinationals controlling farm output is very similar to how the multinationals controlled manufacturing output and moved the process to the place of lowest production costs; and highest profits.  The outputs of U.S. farms are moved around the globe to the location of highest return; it is a controlled market.  This process has driven up the domestic price of U.S food rapidly in the past 20 years.

The multinational agriculture lobby is massive. We willingly feed the world as part of the system; but you as a grocery customer pay more per unit at the grocery store because domestic supply no longer determines domestic price.

Within the agriculture community the (feed-the-world) production export factor also drives the need for labor. Labor is a cost. The multinational corps have a vested interest in low labor costs. Ergo, open border policies. (ie. willingly purchased republicans not supporting border wall etc.).

To offset the 20 year increase in U.S. prices, the multinational lobbyists paid DC to expand food subsidies (SNAP, Food stamps, EBT benefits); this helps their bottom line and shifts tax dollars onto their Profit-and-Loss statements.   This is the ‘exfiltration’ of American wealth. It is a corrupt system.

The proposal by President Trump to shift tariff proceeds to off-set farm losses is okay, perhaps likely necessary, in the short term; but once the issues with China are resolved we are still going to have to deal with the underlying cause of this corrupted market process.

Economic security is national security.

We need to start looking at food production as a National Security issue.

♦The Modern Third Dimension in American Economics – HERE

♦The “Fed” Can’t Figure out the New Economics – HERE

♦Proof “America-First” has disconnected Main Street from Wall Street – HERE

♦Treasury Secretary Mnuchin begins creating a Parallel Banking System – HERE

♦How Trump Economic Policy is Interacting With The Stock Market – HERE

♦How Multinationals have Exported U.S. Wealth – HERE

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177 Responses to President Trump Proposal to Counteract China and Big Club/Big AG Strategy…

  1. dallasdan says:

    SD:

    “In essence income from the tariffs on China would be used to subsidize U.S. farmers.”

    The political importance of such relief to farmers should not be undervalued during the 2020 election campaign. In this context, the immediate impact of the trade confrontation with China is, IMO, more relevant than speculation about the long-term impact, which could easily be altered by the President after his reelection.

    Liked by 3 people

  2. TycheSD says:

    Farmers are not our friends. Even in the days before today’s massive agriculture conglomerates, they have been subsidized and controlled by government policy. Now ‘they’ control the government through lobbying. They have A LOT of power in the Republican Party especially. And they oppose Trump on immigration, particularly the wall. Check this out from USA Today article from December.

    “Opposition to the wall within Trump’s own administration has prevented progress on this issue, which is wildly popular with the GOP’s conservative base and is the consequence of the president surrounding himself with establishment advisers who have worked to thwart his populist agenda from within. For example, after being briefed on the concept of selling USDA commercial paper to pay for border security, Agriculture Secretary Sonny Perdue’s then-Chief of Staff Heidi Green shot down the idea by curtly stating, ‘The secretary does not want the wall.'” https://www.usatoday.com/story/opinion/2018/12/24/donald-trump-shutdown-congress-approval-build-border-wall-spending-column/2402442002/

    What’s worse, this Heidi woman has been working with Jared on his immigration plan. If it were up to me, I would give the farmers nothing. But, because of their power, they have to be bought off somehow, and they will not give up cheap workers willingly. Why does Sonny Perdue control Trump’s agenda?? The guy is a jerk.

    I grew up on a farm. Today’s farming, particularly livestock farming, is nothing like it was when I was growing up. It’s completely detached from the soil, completely detached from life.

    Liked by 2 people

  3. SPECULATION: STRATEGIC TRADE SCENARIOS for BIG AG

    USDA AG PURCHASING Scenario:
    • POTUS has $12 Billion available to “Protect Farmers from China Tariffs”
    • USDA buys Crop Yields exceeding Domestic Supply + Exports Paid-in-Advance
    • USDA pays Prices at “50% of Average Export-Profit” to incentivize Paid-in-Advance Contracting that minimizes exposure to delayed purchases that spoil crops (China’s ploy in 2018)
    • Proceeds from DEALS below REPLENISH the $12 Billion REVOLVING FUND

    International DEALS: USTR negotiates AG DEALS with Underfed Countries
    • USDA exports acquired Agriculture to Underfed Countries (e.g., Africa)
    … a CRITICAL NEED that China CANNOT SERVE.
    • Underfed Countries agree to USA-Mined Raw Materials for Export-to-USA as partial compensation for Crops received,
    … EMPLOYING LOCALS
    … DISPLACING CHINA.
    • Underfed Countries agree to USA-Supplied 5g (and other) Infrastructure Development as partial compensation for Crops received
    … DISPLACING CHINA.

    International DEALS: USTR negotiates AG DEALS with Central America
    • USDA exports Agriculture and Ocean Harvests to Underdeveloped Countries (e.g., El Salvador, Guatemala and Honduras)
    … DISPLACING Exports-to-CHINA.
    • Underdeveloped Countries agree to USA Corporate Investment in Food Processing Plants for Export-to-USA,
    … EMPLOYING LOCALS
    … DISPLACING Exports-from-CHINA.
    • Underdeveloped Countries aggressively REPATRIATE Citizens who Illegally entered the USA, to run Food Processing Plants and rejoin their newly-expanding economies,
    … ENDING the INVASION-of-ILLEGALS CRISIS.
    • Underdeveloped Countries agree to USA-Supplied 5g (and other) Infrastructure Development as partial compensation for Crops received
    … DISPLACING CHINA.

    Domestic DEALS: USDA cuts WELFARE DEALS to supply “Underfed Americans”
    • USDA DISPLACES Big AG to supply Federal Food Programs (SNAP, Food stamps, EBT benefits) at LOWER COSTS
    • 🤣

    Liked by 3 people

    • BONUS: CHINA LOSES!
      • USA Crops diverted as USAID to Underfed Countries REDUCES Supply for China.
      … [People are underfed because the global market lacks sufficient supply.]
      • China LOSES Crop and Seafood Supply for Processing Plants
      … Triggering LAYOFFS and SHUT-DOWNS.
      • China suddenly must pay a BIG PREMIUM for Imports.
      … Due to Short Supply or Packing-by-Others with higher labor costs.
      … OR face FOOD SHORTAGES and POLITICAL UNREST.

      Liked by 2 people

    • BONUS: CHINA LOSES!

      • USA Crops diverted as USAID to Underfed Countries REDUCES Supply for China.
      … [People are underfed because the global market lacks sufficient supply.]

      • China LOSES Crop and Seafood Supply for Processing Plants
      … Triggering LAYOFFS and SHUT-DOWNS.

      • China suddenly must pay a BIG PREMIUM for Imports.
      … Due to Short Supply or Packing-by-Others with higher labor costs.

      … OR face FOOD SHORTAGES and POLITICAL UNREST.

      Liked by 2 people

      • Apologies: Initial comment was delayed-in-processing.

        Like

      • cali says:

        @Black Knight Rides: Yep ^^^^^^^^^This!

        China badly miscalculated because once again like in 2016 they have bet on the wrong horse trying to pretend to come to a trade agreement that is equal and fair although in reality dragging this out in hope a Biden would be elected ergo letting the engineered world order where China plaid their biggest role for a long many years.

        Rush Limbaugh said it best in 2009 after Hussein showed his hand after the election: Rush said Hussein and gang “managing the decline of America and he hopes that Hussein fails”!

        The disadvantage for all Americans was never on the mind of those globalists and their special interest groups and on the contrary it was always the plan: Reducing America to a status similar to that of Zimbabwe.

        President Trump did not only upset the already well advanced ‘world order’ but is now actively getting into the details that enabled this world order to destroy this republic.

        China’s XI is a duplicitous beast that actively interfered not only in the 2016 election but will also do the same in 2020. Money talks for these critters in DC – both parties – how do you think Pelosi became such a wealthy multi-millionaire among 80% of others in DC?

        Liked by 2 people

        • Cali, President Trump assembled the team and laid the groundwork for America-First MAGAnomics Foundations over his first two years.

          He now appears to be blasting away at ALL the foundations of their Globalist Tower of Babel to enable Nation-First MAGAnomics to spread worldwide through Bilateral Trade RECIPROCITY and SHARED Defense.

          Liked by 1 person

    • GB Bari says:

      Ok. In theory it sounds good.
      Why would underdeveloped countries go for the U.S. offer over whatever deals they’ve been getting from China? (I honestly don’t know what China has been doing in particular to “buy” their way into each and every underdeveloped country.)

      Like

  4. BitterC says:

    Not sure if we have the infrastructure to replace/reduce food stamps with actual food. That would at least put our subsidies to farmers to good use

    Liked by 1 person

    • GB Bari says:

      The surplus destined for the needy would be specially branded and distributed as any other brand.
      The food stamps rules would be updated to restrict their usage to purchase the designated special “brands.”

      Like

  5. Alfred Barnes says:

    Much more fundamentally sound plan than the vaporware Green New Deal, heck, anything is more fundamentally sound.

    Like

  6. Bugsdaddy says:

    You are missing the infrastructure part of the equation. Having a source of funding for infrastructure effectively shuts down Piglisi and Chuckleheads end around to spin that issue in their favor.

    Liked by 1 person

  7. Bill Henslee says:

    Use your opponents strengths to your advantage by subverting his momentum. SunTrump

    Like

  8. Kyle says:

    I come from a family of farmers in the Texas panhandle and it seems to me it is all a catch-22 situation. In order to secure loans for operating costs such as seed, equipment, fuel etc you have to contract your crops to people like ADM or Cargill who then suppress the market if the nation has a bumper crop be it corn,cotton or soybeans. IMHO

    Liked by 1 person

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