The Lesser Seen Effect of the Chinese Trade War
The prices of $200 billion in Chinese goods imported to the United States will increase due to tariffs promised by President Trump’s objective to fight China’s supposed unfair business practices; the president made clear that this is his way of negotiating until China ends unfair business practices.
Earlier in the year, President Trump threatened tariffs to increase the price of several products produced in China. American companies produce and American consumers purchase many of these products. With pressures from tech giants like Apple and Intel, many products made in China with American labels were removed from the list of goods with tariffs attached.
While price increase on Chinese produced goods is a concern, noteworthy are the greater consequences on the American agricultural industry due to these tariffs.
China prepares to increase prices of American agricultural exports with its own set of tariffs. The United States relies on China for its large purchase of soy, pork, and beef. The president, aware of his tariff’s consequences on American agriculture, threatened more tariffs if China were to create counter tariffs of its own against American agricultural products.
Tariffs, of any type, are not the solution to any declared reasons of the trade issues President Trump believes China created. A full-out trade war of slapping tariffs on and off traded goods will only hurt American farmers more so by furthering the strain with their number one customer, China.
The top ten soy-producing states, Illinois, Iowa, Minnesota, Indiana, Nebraska, Ohio, South Dakota, Missouri, North Dakota and Kansas supported President Trump in his past election. A majority of these states are largely Republican on a rural, grassroots level.
Last week, President Trump rallied behind Republican candidates in South Dakota and North Dakota, the region where the very tariffs will affect.
Many farmers in these rural states are some of the most loyal supporters to the president; they, like many others belonging largely to the demographic of working-class whites, rallied around President Trump’s promise to ‘Make America Great Again’.
They too, chase the dream of rebooting America’s rust belt for products with shiny Made in America labels. Many of these individuals still passionately hold on to conservative notions of what the United States role among global powers and basic principles of free trade with little government interference.
Noting the need for the middle American’s farmer’s loyalty while still trying to wage his trade war, President Trump’s most recent promise to farmers and ranchers is $12 billion total in relief for any damage during the duking of tariffs between the United States and China. Cleverly marketed alongside this promise is a John Deere green ‘Make Farmers Great Again’ Cap.
This is an underestimate of an agribusinessman’s knowledge of economics; I know this first hand from growing up and having employment on my parents’ hog, soy, and corn farm in eastern South Dakota. At noontime, all chatter ends and the TV is turned on for intense analysis of the grain markets.
Neighbors making small talk share intel on the future of prices of their harvests. A farmer with a mere high school education (or perhaps less than that especially in older generations) experiences firsthand the effects of a turbulent agricultural market. The farmer is aware of economic consequences long term.
Promised subsidies do not balance the loss of a long-term consumer of agricultural goods. Long term, the agricultural industry lost a major customer it relied on for decades.
American agriculture changed over this time to fit a global market by focusing on more effective and efficient methods to produce the most product. Mass produced products such as soy and pork were specifically tailored to accommodate China’s demand for them. These individual agricultural products have their own industry centered around them with American workers employed in their raw production to their processing for a global consumer.
Consideration for American agricultural products and their producers are necessary when seeing the full impact of the tariffs against China.
