The Impact to Agriculture with a Trump Victory

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by Chris Clayton, DTN Ag Policy Editor

 

WASHINGTON (DTN) — In an election result that may have seemed unfathomable just two years ago, a restless and divided United States chose Donald Trump to be its 45th president.

The election will go down as one of the most stunning and sweeping victories in U.S. history as Trump and Republicans took both the presidency from Democrats and potentially both chambers of Congress.

Trump declared victory in the early morning. “While the campaign is over, the work is just beginning,” Trump told supporters.

It became decisive as Pennsylvania was called for Trump just after 12:30 a.m. Central time, according to Associated Press. At that point, Trump was at 265 electoral votes and just five away from capturing 270. Still, at 1 a.m., Hillary Clinton's campaign chairman, John Podesta, came out and told Clinton supporter that the campaign would wait until all the votes were counted and Clinton would not come out and speak.

Trump was leading in the early morning in Michigan, (16 votes) Wisconsin (10) and Arizona (11). Further, some media had called Alaska and its three electoral votes while others had not.

The election results showed just how angry American voters were with the current state of the economy and traditional politicians. The results were a devastating loss for Democrats who went into Election Day convinced Clinton was going to win the White House. Further, Republicans held the Senate as well.

Trump, 70, played to a rural strategy, particularly in the final days of the campaign as he sought to boost the turnout among rural, white voters who are far more conservative than other Americans. Trump swept the Plains from Texas to North Dakota, as well as the Southeast.

DTN/The Progressive Farmer poll last week showed Trump getting nearly twice the rural vote as Clinton. That certainly played out in Tuesday's election. http://dld.bz/…

The tide turned throughout the night as Trump captured key battleground states of Florida and Ohio, North Carolina, Wisconsin, Pennsylvania and Michigan.

Global stocks plunged as results came in throughout the evening as Trump's momentum began to build in Florida and other battleground states. Shortly before midnight Central time, Dow Jones futures were trending down 700 points. The S&P and Nasdaq halted nightly futures trade after 5{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8} losses. The U.S. dollar index was down 1.8{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8} and the Mexican peso futures were down more than 7{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8}. By 5 a.m. Central, DJIA futures were still down about 300 points while European equity markets were slowly extending gains. The U.S. dollar index was down .575 as gold pushed its rally back to $30. Crude oil has turned higher, posting small gains after losing almost $2.00 Tuesday night. Grains remain under pressure Wednesday morning with soybeans down 8 cents, corn down 4 cents and Chicago wheat off 5 cents.

Beyond defying most conventional political norms, Trump's campaign attacked the global trade economy and U.S. immigration. That resonated in rural America and turned pre-election polling on its head. Clearly, political elites — particularly professional pollsters — underestimated Trump's strength in rural America and the influence it would have on the presidential race.

A major issue for Trump in the coming weeks will be to convince wary investors that he and his advisers are up to the task of managing the U.S. economy. A sustained decline in market equity won't bode well for anyone leading into the holiday season.

Trump will govern with a GOP-led Senate and House. Democrats, despite a major push to capture the Senate, were crushed in several Senate races Democrats expected to win. Thus, one of Trump's first opportunities will be to fill the open Supreme Court seat with a conservative justice.

Trump has promised to lift the yoke of regulatory burden off farmers, largely by retracting rules at EPA such as the waters of the U.S. rule in the Clean Water Act. Trump's agricultural advisers during the campaign have also talked about reducing regulatory controls under the Bureau of Land Management and with the Endangered Species Act.

Trump also plans to scrap all Obama administration regulations on climate change and energy production. Trump has argued his administration would concentrate on “energy dominance as a strategic economic and foreign policy goal.” With that, he has called for removing regulators that are obstacles to energy exploration.

Yet, the cornerstone of Trump's campaign was his immigration agenda, which resonated early with GOP primary voters as Trump promised to build a wall between the U.S. and Mexico. Immigration enforcement will be much tighter under a Trump administration. That means farmers who rely on immigrant labor are going to have to ensure those workers are in the country legally under a Trump administration. He has called for tougher enforcement crackdowns and wants to triple the number of Immigration and Customs Enforcement officers around the country. Further, Trump wants to expand the federal E-Verify program, which has largely exempted farmers in the past.

One of biggest impacts a Trump administration might have on farmers is in changes to the tax code. Trump has promised to end the estate tax, but his plan also calls for a capital gains tax on assets valued over $10 million, though Trump's website states small businesses and family farms would be exempted. Trump's tax plan, if enacted, would reduce the tax code from seven brackets to three with a top tax rate at 33{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8} for incomes of more than $225,000. Corporate tax rates would be lowered to 15{e1c719bd29d6bb84a792d8ffcb03a61a093900316f2da3efbd39b86f03d248b8}.

Trade will be an area where a Trump administration may clash the most with farmers and many business people. Trump opposes the Trans-Pacific Partnership and has said he would withdraw the U.S. from the deal, which has not yet been ratified. Trump also has called for renegotiating the North American Free Trade Agreement, though both Canada and Mexico have balked at such a request. Trump also has said his administration would aggressively pursue trade cases against China. That means a Trump administration would push to reset the trade dynamics with the country's three largest destinations for U.S. ag exports. It is still possible Congress and Obama could get a TPP deal approved in a lame-duck session of Congress, but that is doubtful.

Trump has talked little about the farm bill and would be expected to leave a lot of that work to Congress. His advisers, as well as at least some members of Congress, have discussed starting the process of writing a new farm bill earlier than expected because of low commodity prices. That, however, could clash with congressional expectations of reducing government spending.

 

 

© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.

 

Photo courtesy of USDA NRCS.


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