First of a three-part series
Donald Trump is now riding a wave of history, benefiting from the fact that no Republican who has won both the New Hampshire and South Carolina primaries has been derailed for the nomination.
Markets have tended to rise in an election year. Not this time. Markets loath disruption and there is a load of that coming if Trump is elected.
At some point in time the markets, ag markets specifically, will have to measure and discount the impact of the pending change that this election would bring to U.S. policies and how they would bear on these markets.
Granted, Congress may be a moderating factor, but promises being made such as building “the Wall” and making Mexico pay for it, would destroy Trump as president if not kept.
So let’s take a virtual journey into what a Trump presidency would be like and what its impact on the ag sector might be based upon his campaign promises.
This three-part series will conclude with measures we can take to protect our interests in the ag sector.
Trump has promised to deport 11 million undocumented people living in the U.S. and their families. He also has promised to register the 12 million Muslims in the U.S., including U.S. citizens of the Muslim faith.
Sixty-five percent of the voters who choose Trump in the South Carolina primary support the ban on Muslims entering the country that Trump proposed.
One of the first things Trump will have to get Congress to agree to is fund the creation of a new enforcement entity with the capability and resources of implementing Muslim registration and immigrant deportation en-masse.
It will be similar to a gestapo as it will be charged with finding and handling people who do not want to be found or cooperate with Trump’s dictates. Muslims will not concede to registration and immigrants will not self-deport willingly.
That means that force, consisting of some kind of incentive or penalty will eventually have to be employed for compliance. There will be resistance likely to the manifest, turning it into a new domestic security risk that currently does not exist. Instead of making us safer we will become less so.
The Mexican economy grew 2.5 percent last year. The PEW Research Center said the flow of Mexican immigrants coming to this country is now the smallest since the 1990s.
In fact, it believes that from 2009-2014 there was a net 140,000 Mexicans that returned home. This was the result of stricter enforcement of the border and an improving Mexican economy producing jobs in Mexico.
The Mexican immigration population in the U.S. peaked in 2007 and has leveled off since. It has not grown for several years. Unauthorized immigrants make up 5.2 percent of the U.S. workforce and an enormously disproportionate share of these workers are employed in the ag sector.
The Department of labor said half of farm workers are illegal, while growers and other industry sources estimate the total at 70 percent.
Livestock, dairy, fruit, vegetable production and most food processing relies heavily on immigrant labor force. The National Milk Federation said milk prices will increase 61 percent if access to these workers is eliminated. It prefers to hire Americans and employ all that wish to milk cows. As an overall economic contribution, these foreign workers add .5 percent to GDP.
They also add youthful demographics to a nation of aging Baby Boomers where the number of workers supporting retirees is declining. The ag sector has had more personal experience with these workers and their families than any other and attests to their general good character and work ethic. Their reputation has been maligned by others for political purposes.
The ag sector has been seeking a legal solution to access this available and effective workforce. Mass deportation of immigrants will slow the U.S. economy, increase the federal deficit and worsen the demographics forcing more draconian entitlement reform. I don’t think average Americans cares about these things until food prices rise and then they will blame American farmers for that. This will reduce U.S. food security.
So Donald builds the wall as promised and imposes a 35 percent tariff on Mexican imports, 80 percent of which are coming to the U.S., to pay for it. Mexican exports will collapse, their economy will tank, unemployment will soar and Mexico will endure a major economic recession/depression.
This would create even greater incentive for Mexicans to enter the U.S. illegally as the job opportunities are destroyed at home. Into the morass created by the massive economic disruption that has been caused by the punitive tariffs, Trump will deport the 11 million illegals and their families dropping them over the wall creating a humanitarian crisis.
The mass deportation would collapse the Mexican economy. Anyone not in the drug-smuggling business in Mexico now would be forced to participate out of necessity, as real jobs would have been destroyed by Trump and, as he is acting as our president, the USA.
They will never forgive us. This would needlessly and foolishly exchange what has been a close friend and ally creating an enemy. It would destabilize Mexico on our southern border creating yet another national security concern.
What am I up to now? – damaged U.S. and Mexican economies along with at least three new U.S. security concerns:
Muslim and immigrant resistance that would become violent, a loss of food security and soaring food prices, along with a Mexican population that now hates us Gringos with a passion.
I would recommend that vacations to Cancun and Cabo be cancelled for concerns over personal safety, which will further damage the Mexican economy.
This is just one piece of the crap sandwich Trump will serve up. We will continue our virtual tour of Trump policies in next week’s column, part 2 of this series.
David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.
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