China’s latest trade actions in response to U.S. tariffs are striking right at the heart of Trump country.
U.S. farmers preparing to plant soybeans this season are now facing the prospect of losing money on their crops before they put their seeds in the ground, after China announced on Wednesday that it would retaliate with 25 percent tariffs on dozens of farm products if the U.S. carries through with its 25 percent levy on Chinese imports.
Trump administration officials have dismissed concerns about harm to the American economy from the escalating tit-for-tat trade war, but farming communities are already feeling the effects.
“The governments have the ability to be irrational in rhetoric and in deed longer than a single farmer has the ability to remain solvent,” said Brent Bible, a soybean and corn farmer in central Indiana. “Does it take a year? Does it take two years to finally come to some equilibrium? That’s a long time for the typical farmer to have to sit and wait for prices to become profitable.”
The Chinese market is especially crucial to American soybean farmers. The United States exported nearly $14 billion worth of soybeans to China in 2017, representing nearly 30 percent of the nation’s soybean production.
Futures prices for soybeans dipped between 4 and 5 percent at the beginning of the day on Wednesday in response to China’s threat. Farmers said they don’t predict any major long-term market improvements amid all the trade uncertainty. China listed more than 100 items that would face the tariffs if instituted; by value, soybeans would be the most significant product on China’s list.
“The anticipation of what is to come is really what’s driving those prices down today and probably for the foreseeable future,” Bible said.
The USDA’s crop forecast for soybeans released last week predicted slightly less acres being planted. That drove prices a little higher last week, giving farmers some hope of better returns come harvest time. But with China’s tariffs now more of a reality, that hope has all but diminished.
“As well as trying to outsmart the weather and bugs and weeds, now you gotta outsmart our president and you gotta outsmart the markets based on what the president is doing,” said John Kiefner, an Illinois farmer who grows soybeans about 50 miles southwest of Chicago.
(Excerpted from Politico 4/5/18)