Financial markets are melting, soybean futures are freaking out, tariffs threaten our economy. Why is this man laughing?

I suppose we all just have to collectively shrug, even as we slap our foreheads with dismay. Donald Trump won fair and square and he gave his supporters just what they wanted – sweeping tariffs that they actually believed would be one of the best things that ever happened to the American economy.

As we’ve seen during the last few days, though, the markets aren’t buying it. The stock market has a case of the heaves, getting no relief by the instigator himself, President Trump, asking us to trust him. He says this even as he sallies forth to a golf tournament in Florida while the rest of us watch our investment portfolios get shredded by the minute.

The stock markets have lost a decent year’s worth of gains in the past two days, which is the financial world’s way of saying Trump’s tariffs stink. Writes finance behemoth J.P. Morgan in its assessment for the rest of the year: “There will be blood.”

As bad as it’s getting in the financial markets, it isn’t much better for ag commodities, where cattle and soybeans — especially important in South Dakota — have gotten hammered on the news that China, a big buyer of American farm goods, is slapping a retaliatory 34% tariff on imports from the United States. At the Chicago Board of Trade soybeans yesterday traded below $10/bushel, roughly equal to prices they were fetching 10 to 15 years ago. Adjusted for inflation, these prices are terrible. Meantime, American farmers, who get huge quantities of potash from Canada, are facing soaring fertilizer prices because of Trump’s utterly stupid – the Wall Street Journal says “dumb,”, but I’m sticking with “stupid” – trade war. 

Farmers saw prices slump badly during Trump’s trade war with China during his first term, so it’s not as if the ag community couldn’t see this coming. The way farm states last November went so strongly for Trump is contra-intuitive, but it makes sense if farmers are expecting the same kind of bailout they got during Trump 1.0. Called “mitigation payments” to make up for losses created by Trump’s first term trade war, the USDA paid billions of dollars to farmers as a result.

In that context, farm-state support for Trump is perfectly rational.

What seems irrational are Trump’s expectations for good things to emerge from this debacle.

I’m looking for an economist who isn’t on Trump’s payroll to agree with the outcome that Trump foresees, an outcome where trillions of dollars of foreign investment in industrial infrastructure come into the United States in order to avoid American tariffs.

There’s widespread disagreement with that contention. The general conclusion among the doubters? Per USA Today’s wrap-up, “it’s unlikely a significant share of makers with overseas factories will move established supply chains halfway around the world under the threat of on-again, off-again tariffs whose duration is uncertain in a tumultuous economic climate. Those that do would have to grapple with severe shortages of skilled workers. Even if a sizeable share relocated to the U.S., the number of jobs created would be relatively small and more than offset by those wiped out in a recession.”

Considering the costs and the magnitude of realigning global supply channels after a wholesale stampede to move production from all over the world to the United States, it’s hard to envision Trump’s vision materializing into reality.

Meantime we just have to wait and see where and when the financial market bloodletting will stop. 

John Tsitrian is a businessman and writer from the Black Hills. He was a weekly columnist for the Rapid City Journal for 20 years. His articles and commentary have also appeared in The Los Angeles Times, The Denver Post and The Omaha World-Herald. Tsitrian served in the Marines for three years (1966-69), including a 13-month tour of duty as a radioman in Vietnam. Republish with permission.