US-China trade disputes to hit America’s heartland harder than expected

US farmers have been bracing for a tariffs race between the Washington and Beijing ignited by the Trump administration: economic shots that would likely hurt the historic US heartland.

Since China’s response to US President Donald Trump’s tariffs hike policy announced in March, economists have delved into extensive analysis and gloomy prognostication from the disputes.

The cards are on the table and there’s no mystery about China’s next move, said David Richardson, a political analyst from Washington DC.

“With each of Trump’s tariffs, China will strike back, and the impact will be worse than indicated by initial economic reports and especially the US media,” Richardson said Monday.

“Long-term, adverse consequences,” said Vince Smith, an economist at Montana State University.

Experts say the ripples of pain from the vast US heartland also strike at the very core of America’s historic, cultural fabric. “Wheat is called the sacred crop from the Bible, our daily bread, and also is called ‘amber waves of grain’ in ‘America the Beautiful,’” said Brad Erker, executive director of the Colorado Association of Wheat Growers.

The anthem “America the Beautiful” glorifies the country’s vast wheat fields that cover more than 1 million square miles (2.6 million square km) from Texas to North Dakota.

More than 160,000 US farms in 42 states contribute to wheat production, according to the 2007 Agriculture Census. Two-thirds of these farms are in America’s Great Plains that stretch west from the Mississippi River to the Rocky Mountains.

Nationwide, farmers devote more than 45 million acres (182.1 million hectares) to wheat production each year.

But even bigger agriculture losers in a US trade dispute with China will be corn and soybean farmers, according to Smith, an agricultural economist specializing in international trade.

Soybeans yield annual revenues of $38 billion, US Department of Agriculture statistics show, and the industry is in the cross-hairs of the retaliatory salvo with potential losses in the billions alone, experts say.

US export data shows China’s 1,085 million bushels a year dwarfing other top soy recipients: EU at 167, Mexico 131 and Japan 80.

With China importing 90 percent of its soybean needs and 34 percent of these coming from the US, signs are clear that looming economic hardship could be severe, according to Dutch multinational banking company Rabobank.

Rabobank, a leading financial services provider for the agri-business sector, said that US farmers could be driven to reduce soybean acres, while South American farmers will see an expansion of their harvest.

The company predicts a rise in the prices of all soy products to the American consumer, and notes that “if all proposed duties took effect, 40 percent of US exports to China would be affected but only 10 percent of China’s exports to the US (would be).”

In the wheat industry, Montana was the US third-largest producing state in 2017 behind Kansas and North Dakota.

“Not many options,” said Montana State University Professor Anton Bekkerman, on the future of the American wheat farmers. Already, North Dakota farmers have shifted away from wheat production, and the ripple effect of the upcoming tariffs might include America’s fragile involvement in the North American Free Trade Agreement, according to Bekkerman, a well-published agricultural economics expert.

Countries like Mexico are already looking for other places to buy wheat, and that strain is getting producers worried, Bekkerman said.

With China, the European Union and India producing more wheat than US farmers, buyers may start looking to other global producers to meet their needs, thus leaving America in the lurch, experts said.

Survival for the American farmer may mean focusing on “quality” or receiving federal subsidies to pay the bills.

“China is growing like crazy with an expanding middle class,” said Bekkerman. “They want quality products and that is an area where we can always deliver.”

The owners of the US’ 2 million farms have been historically conservative and oppose government bailouts and subsidies, but Trump Administration officials are already mentioning this possibility. “There are new rumors that Trump and [Secretary of Agriculture Sonny] Perdue will enact domestic policies to keep prices up for farmers,” Erker said. “These domestic policies would mean subsidies – a price borne by taxpayers in the US, and nobody wants that,” Erker said.