Farmers in Ohio, one of the states that helped push Donald Trump to victory in the 2016 election, are going to be hit very hard as the president follows through with new tariffs on China, according to a new Ohio State University analysis.
OSU researchers are predicting that annual net farm income will plummet by 59 percent at a time when producers are already suffering from low prices.
“There are farmers who are struggling across the state,” said Ben Brown, head of the farm management program at OSU’s College of Food, Agricultural, and Environmental Sciences and an author of the study. “If the proposed tariffs go into effect, we’re going to have farmers who will have to exit the industry," he said, noting that the biggest impact will be on profits from soybeans, although corn is also affected.
Trump announced today that he will proceed with the plan to hit China with $50 billion worth of tariffs as punishment for its efforts to acquire U.S. intellectual property through theft or forced transfer. China’s reaction was swift. China announced it would hit back with retaliatory tariffs, including new taxes on U.S. soybeans and corn.
AFP reports China’s Ministry of Commerce responding: "We will immediately launch tax measures of equal scale and equal strength.”
That reaction “would result in higher machinery costs, lower corn, soybean and pork prices for U.S. agricultural producers, and a decrease in the net worth of Ohio farm families,” the OSU report concluded.
Net income on an average Ohio farm would drop from $63,577 to $26,107 if China enacts a 25 percent retaliatory tariff on U.S. soybeans and corn, the OSU researchers predicted.
Chinese importers are already buying less U.S. soybeans than normal – sourcing more from South America - because they fear the situation will get worse once the 25 percent tariff is in place. U.S. exporters are scrambling to sell the U.S. soybeans to Europe and elsewhere, often at a discount.
All of this, the OSU researchers say, “will likely decrease production in the U.S. and increase production in Brazil, enough to promote the largest South American producer to the spot of largest producer in the world.”
Illinois farmers are also bracing for China’s retaliatory tariffs, and Iowa Soybean Association President Bill Shipley predicted that prices will continue to fall.
“There are no winners in a trade war and one that includes soybeans will not start or end well,” Shipley said. “U.S. soybean prices have already plummeted by about $1 per bushel since the beginning of June. Prices will likely drop further should the tariffs be imposed. This will further pressure agricultural families and businesses already struggling with below break-even commodity prices.”
China now buys roughly 60 percent of all the soybeans produced in the U.S. – worth about $14 billion annually - and a recent study out of Purdue University predicts Chinese tariffs would result in 65 percent cut in U.S. exports.
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