Ag community caught in crosshairs of trade war

PRESIDENT Trump has made it clear he’s OK with trade wars because they’re “easy to win.” Oklahoma soybean farmers are among those hoping the president is right, because they’ll feel the pain if he isn’t.

Trump’s recent tariffs on steel and aluminum prompted China to retaliate Monday by placing tariffs on 128 categories of American goods, including pork, fruits and nuts. These tariffs affect only about 2 percent of the U.S. goods exported to China — but they impact the farmers who produce those goods. Pistachio farmers in California, for example, export 55 percent of their crop to China.

This retaliation, The Wall Street Journal wrote, “is best understood as an economic and political demonstration, hitting a small number of products to signal where future blows could fall if the Trump Administration imposes punitive tariffs on $60 billion in Chinese goods to punish the theft of intellectual property.”

A promise of future blows came Wednesday, when China threatened to levy tariffs on 106 more U.S. products, including soybeans, corn, cotton, sorghum, wheat, cars and aerospace. This was a response to the Trump administration saying a day earlier that it will place 25 percent tariffs on 1,300 Chinese-made products including flat-screen TVs, aircraft parts, medical devices and shoes.

The Chinese didn’t provide an implementation date for the new tariffs, saying that would depend on whether Trump goes forward with his latest plans. Yet just the promise of new tariffs had an immediate impact. Soybeans on the Chicago Board of Trade, for example, immediately dropped as much as 5.3 percent.

That’s because China, the world’s largest importer of soybeans, bought about $12 billion worth of the crop from U.S. farmers last year. Thirteen percent of the roughly $130 billion in U.S. exports to China in 2017 were agricultural products, and soybeans made up the bulk of that.

Analysts interviewed by Bloomberg News said Brazilian soybean farmers would likely benefit most from this dispute. Many Oklahoma farmers would be among the losers — Oklahoma exported roughly $52 million worth of soybeans in 2015, much of that to China. Our state’s wheat farmers and livestock producers will be hurt by this battle, too.

Ken Roberts, an analyst at Forbes.com, noted that 25 percent tariffs on U.S. pork exports would disproportionately affect farmers in Oklahoma, Missouri and North Carolina, while the nation’s two largest pork-exporting states (Iowa and Texas) would be less affected. Oklahoma, the 10th-ranked pork-exporting state, sent 14.55 percent of its exports to China last year, Roberts said.

Chinese officials said Wednesday they were willing to work with the administration, which has said it’s using tariffs as a negotiating tool for a better deal. Where there is significant imbalance, better deals should be pursued. However, China’s vice-minister of commerce said, “If someone wants a trade war, we will fight to the end. If someone wants to talk, our door is open.”

Oklahoma’s ag community, many of whom voted for Trump in 2016, want to see more talking and less fighting.