‘It’s a lot of money’ — Trump’s tariffs take a toll on farmers in Pennsylvania, a key state in the fight for Congress

Finance news

Bill Beam has had no issue selling his soybeans this year. The Pennsylvania farmer has run into problems with price.

Soybean futures prices have plunged more than 15 percent since China said in April that it would levy 25 percent tariffs on more than 100 U.S. products including soybeans in retaliation for the Trump administration’s duties on steel and aluminum. Beam, who plants soybeans on nearly 1,500 acres of a southeastern Pennsylvania farm that his father and grandfather managed before him, says the price change had a “substantial” effect on his revenue.

Beam, who sells soybeans to brokers for eventual export, told CNBC that he estimates the value of his soybean crop has fallen by about $100 an acre — or nearly $150,000 overall.

“It’s a lot of money,” the 58-year-old Beam told CNBC at his Elverson, Pennsylvania, farm last week. “If I lose $100 an acre, and you take the acres that I farm, it’s a lot of money. And I don’t think there’s anybody that really can say they’re making a lot of money at these prices, if any.”

Beam, who supported President Donald Trump, also farms wheat and corn. He said farmers who grow crops like his have the ability to store them and wait until prices recover. “That being said, you’ve still got to pay your bills eventually, so that’s a challenge,” he added.

Many farmers across the country face similar challenges. The president says 25 percent and 10 percent duties on steel and aluminum imports, respectively, and barriers on Chinese technology will help to protect American jobs and punish major trading partners for unfair practices. Some Republican and Democratic lawmakers agree with his thinking, to some extent. But China, Canada, Mexico and the European Union have responded in kind, targeting politically important products such as crops from red farm states, bourbon from Senate Majority Leader Mitch McConnell’s home state of Kentucky and motorcycles from House Speaker Paul Ryan’s state of Wisconsin.

With only months before November’s midterm elections, other farm state and free trade congressional Republicans have grown increasingly agitated about Trump’s tariffs. GOP lawmakers worry about the potential damage they will do to companies and possible costs they will pass on to consumers.

In some areas affected by the tariffs, candidates for Congress have had to strike a balance between speaking for area workers who believe tariffs will help them and supporting local businesses and consumers who fear damage from the policy. As the U.S. exchanges blows with global trading partners in a widening series of conflicts, candidates across the country have had to adapt to a changing trade landscape.

Pennsylvania is among a handful of states critical in deciding which major party holds the House after November’s elections. The combination of a midterm environment that favors Democrats and the revision of a Republican-drawn congressional map has given Democrats hope that they can flip a chunk of the districts in the Keystone State. The party needs to win 23 GOP-held districts nationwide to take a House majority.

Several states — particularly Midwestern farm states — have taken a bigger hit than Pennsylvania from the tariff broadsides since it’s just a middling soybean producer. And pockets of Pennsylvania have strong metals industry and labor union traditions, factors that can make voters more receptive to Trump’s steel and aluminum tariffs.

But the farming industry is taking an additional hit. Beam, the farmer from Elverson, said the cost of some farm equipment inputs has climbed because of the metals tariffs.

In March, the Pennsylvania Farm Bureau warned about backlash from the steel and aluminum tariffs. In a statement, the group’s president, Rick Ebert, said that “higher tariffs make our products more expensive and less competitive, which opens the door for other countries to replace the U.S. as a supplier of food overseas.” The state has a large dairy industry, which has already suffered from an oversupply problem and a continued shift by consumers away from dairy milk.

Steel and aluminum producers, like many of their workers, have cheered the tariffs and the higher prices the duties have helped to create. But some companies that rely on imported metals have sounded an alarm about damage.

Those factors in part blur partisan opinions on the tariff policy as Republicans and Democrats battle for control of the House in a battleground state.

Take Pennsylvania’s newly redrawn 7th District, one of the few dozen most important races in the fight for House control. The eastern district, held by outgoing GOP Rep. Charlie Dent, now has a slight Democratic lean under the new map. It includes the blue cities of Allentown and Bethlehem, a former steel stronghold, as well as smaller towns and rural areas that helped Trump to win Northampton County in 2016.

The tariffs could affect some area businesses. Mack Trucks employs about 2,400 people at an assembly plant in Lower Macungie Township, just outside of Allentown, according to The Morning Call newspaper. Manufacturing in the U.S. “could become a competitive disadvantage” after the steel tariffs, depending on “how the issue evolves,” a spokesman for the company told the outlet. Mack did not respond to CNBC’s request to comment.

Both the Republican and Democratic candidates for the 7th District seat have taken a measured, cautious approach to the president’s tariff policy. GOP candidate Marty Nothstein, a member of the Lehigh County Board of Commissioners and former Olympic cyclist, said he supports “fair trade” and believes the president’s tariffs “have been created to protect the American worker first and foremost.”

“What I don’t like, what we’re seeing a little bit is this tit for tat on tariffs right now. You know, back-and-forth with China,” he told CNBC last week. “As somebody who farms and owns a farm and understands the ag community, it’s another thing I don’t like to see, as well.”

Democratic candidate and former Allentown solicitor Susan Wild also treated the issue carefully. She said she will keep an “open mind” about tariff policy and acknowledged the need to hold China “accountable” for its trade practices — which Trump has tried to do in part through the duties.

“I think there are people who stand to really lose out. I think we can’t lose sight of the fact that some things are going to cost more as a result of these tariffs,” she told CNBC last week. “Having said that, I’m not sure that the underlying concept for them is all bad.”

The district is a top target for Democrats. Nonpartisan election analysis sites view it as a close contest that currently favors Wild: Cook Political Report and Inside Elections rate it as a district that leans Democratic, while Sabato’s Crystal Ball lists it as a toss-up. Public polling in the race is not yet available.

The candidates’ tariff sentiments echo the blurring of party lines seen in a pivotal western Pennsylvania special election earlier this year. After Trump proposed the steel and aluminum tariffs in March, both Democrat Conor Lamb and Republican Rick Saccone showed at least measured support for the policy as they ran for Congress in Pennsylvania’s 18th District.

Lamb, who won the election by a slim margin and will serve in the House at least into January, is now trying to beat GOP Rep. Keith Rothfus in the state’s new 17th District. On his campaign website, Rothfus touts his 2015 vote against the Trade Promotion Authority, which gave then-President Barack Obama “fast-track” authority to negotiate the 12-nation Trans-Pacific Partnership trade deal. Trump pulled the U.S. from the agreement, saying it harmed American workers.

It is unclear now how exactly tariffs will influence voters — though political damage in Pennsylvania will likely be easier to contain than in other states more heavily affected. In the farmer Beam’s case, the hit to the soybean business has not changed his conservative leanings.

Beam’s home and scattered 3,500 acres of farmland sit off of rolling country roads near the borders of Pennsylvania’s new 6th District. Democrats also aim to take that seat — which stretches from the western Philadelphia suburbs to the north through the city of Reading. Retiring GOP Rep. Ryan Costello currently represents the district, and he has signed on to legislation that would limit Trump’s ability to impose tariffs.

“It would send a strong signal to Pennsylvania workers and families that Congress is committed to supporting American jobs and a strong economy,” Costello said in a statement earlier this month.

Weather and trade policy, among other factors, have contributed to a challenging year for farmers, Beam said. He voted for Trump and understands why the president has tried to crack down on China’s trade practices.

While Beam said he has not followed redistricting or November’s congressional races closely enough yet, he noted that he still supports Trump despite the impact on his soybean business.

“If the election was today, and Hillary [Clinton] was on the ticket and Trump was on the ticket, I’d absolutely vote the same way. Without a doubt,” he said.