Escalating Trade Tensions Continue to Weigh on Agricultural Exports
November 15, 2018
Written By Adam Buckallew
Farmers hoping for a quick resolution to the trade war between the United States and China may be kept waiting for the foreseeable future. The commercial conflict escalated when President Donald Trump instructed his administration to enact $200 billion of new tariffs on a wide array of Chinese goods by Sept. 24.
Before Beijing had even announced its decision to retaliate with fresh levies of its own on $60 billion of U.S. products, Trump threatened he would “immediately pursue phase three” which would impose an additional $267 billion worth of border taxes covering virtually all Chinese exports to the United States.
The latest tit-for-tat tariffs have intensified the dispute between the world’s two largest economies and dimmed the prospects of a return to the negotiating table in the short term. As Trump and Chinese President Xi Jinping take turns slapping special taxes on imports from their counterpart’s country, the two sides plunge deeper into a protracted trade war without an off-ramp in sight.
As the trade war rages on, the agricultural community has borne the brunt of the fallout. Already weakened by years of low commodity prices, many farmers and livestock producers find themselves in precarious positions that have only been exacerbated by the ratcheting of trade tensions.
“As we head into the 2018 harvest season for corn and soybean out here in Iowa, this escalation of the trade conflict really couldn’t come at a worse time,” Iowa Agriculture Secretary Mike Naig said in an interview with CNBC. “Our farmers understand that there are issues that need to be resolved, particularly with China. But there is no doubt that the retaliatory tariffs are impacting our marketplace and our producers negatively.”
China has imposed hefty tariffs on more than 90 percent of the U.S. agricultural exports headed to its shores in response to tariffs enacted by the Trump Administration. Nearly $20 billion in U.S. agricultural exports went to China last year, with more than half of that amount coming from soybeans. Since the talk of tariffs began this summer, soybean prices have dropped more than $2 a bushel.
Livestock producers are feeling pinched too. U.S. pork exports by volume to China are 58 percent lower than they were at this time in 2017 and 80 percent lower than this point in 2016.
In August, the Trump Administration announced it will provide up to $12 billion in emergency aid to farmers to offset losses caused by retaliatory tariffs. While most farm groups have expressed appreciation for the assistance, they have made it known they would prefer “trade not aid” and that the payments would be insufficient in making farmers whole.