Speaking in Wisconsin on Sept. 21, 2020, Biden said Trump started a trade war that "led to a surge in farm bankruptcies." This claim is partly true. Although farmers were particularly hard hit by retaliatory tariffs imposed on the U.S., farm bankruptcies have been rising each year since 2014. Experts say the trade wars were just one factor driving the increase, along with low commodity prices and natural disasters.
The trade wars took a toll
Campaigning as a dealmaker in 2016, Trump promised to renegotiate U.S. trade deals in America’s favor, and once in office he imposed tariffs seeking to achieve that end.
Many countries — including China, Canada, Mexic — as well as the European Union retaliated with tariffs of their own that struck U.S. agricultural products.
Between July 2018 and August 2019, for example, the Brookings Institution reported the U.S. announced tariffs on more than $550 billion in Chinese products, and China retaliated with tariffs on more than $185 billion on U.S. products. U.S. producers were doubly hit since numerous studies showed the U.S. companies primarily paid for the U.S. tariffs.
The toll on farmers was heavy enough the federal government created the Market Facilitation Program, which paid out more than $14 billion to farmers in 2018 and 2019 to mitigate the impact of the trade wars.
Farm bankruptcies rose
Amid this environment, farm bankruptcies did rise in 2019 — the point where you’d expect to see a spike given the trade battles occurring at the time.
That year, 595 family farmers filed for Chapter 12 bankruptcies nationwide, up from 498 filings a year earlier, Reuters and others reported. Chapter 12 is a bankruptcy code created during the 1980s farm crisis to allow family farmers and small fishing operations to keep operating while they work out plans to repay lenders.
Wisconsin led the nation with 57 bankruptcy filings, 16 more than any other state.
But experts say you can’t draw a dark line between the trade wars and the rise in bankruptcies.
Though the jump from 2018 to 2019 was the largest in recent years, bankruptcies have been rising for a while.
After Chapter 12 bankruptcies dropped from 723 in 2010 to 361 in 2014, the number has steadily grown since.