The U.S. and China are set to hit each other with tariffs on $34 billion worth of goods Friday and neither side is showing signs of changing course. That’s particularly concerning for the U.S. ag sector, the target of most of the tariffs China is preparing to levy on the U.S., and it has farm groups and lawmakers bracing for the worst.
Sen. Chuck Grassley, R-Iowa, who is just one of many lawmakers opposed to President Donald Trump’s tariffs on the Chinese because of the damage China’s retaliation would cause to U.S. farmers, said today that he does not expect Trump to back down.
The list of ag commodities China has promised to hit with a new 25 percent tariff is long and includes grains, oilseeds, beef, pork, fruit, vegetables, dairy and tree nuts.
Just the threat of tariffs is already pushing Chinese importers to shun U.S. soybeans and buy more soybeans and corn from Brazil where the devaluating currency has made doing business especially cheap for importers.
“Many farmers who had expectations to break even for this year are now worried that they could sustain significant losses …” Grassley told reporters today on a regular weekly conference call. “The threat of tariffs is putting significant pressure on corn and soybeans.”
China now buys roughly 30 percent of all the soybeans produced in the U.S. – worth about $14 billion - and a recent study out of Purdue University predicts Chinese tariffs would result in 65 percent cut in U.S. exports.
Some farmers will last longer than others during a trade war with China, Grassley stressed, but all of them will suffer and some will go under during a prolonged conflict.
“The message out here in Iowa … has been very clear,” Grassley said. “They’re on the edge - really on the edge - because of this administration’s effort to rebalance trade.”
White House trade adviser Peter Navarro said recently that Trump will not relent unless China agrees to two things: an annual $200 billion decrease of China’s trade surplus with the U.S. and assurances that China will stop appropriating U.S. intellectual property.
Grassley said that some farmers have told him during recent townhall meetings that they stand fully behind Trump’s trade actions against China, but he stressed they are rare. Most farmers, he added, just want to be able to keep farming and selling their crops and that’s why he’s fighting the White House on this.
“I know, as a whole, it is very, very bad for agriculture and I have a responsibility to fight for all 88,000 (Iowan) farmers,” he said.
And the worst could be yet to come, even after the two countries implement the tariffs on Friday. Trump has threatened to keep increasing the tariffs if China retaliates and China has pledged to retaliate.
(This story corrects the percentage of soybeans China buys from the U.S.)
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