Trump trade poli­cies harm­ing Amer­i­can busi­ness rev­enues

Moose Jaw Express.com - - Coming Events - By Ron Wal­ter For Moose Jaw Ex­press Ron Wal­ter can be reached at ron­joy@sask­tel.net

Tar­iffs against Chi­nese and Mex­i­can im­ports are show­ing up in the United States as harm­ful to lo­cal busi­ness op­er­a­tions.

Tyson Foods, the world’s sec­ond largest pro­ces­sor of chicken, pork and beef, warned share­hold­ers that earn­ings will be re­duced by un­cer­tain trade poli­cies and tar­iffs.

In re­tal­i­a­tion for U.S. tar­iffs, China and Mex­ico placed tar­iffs on im­ports of beef and pork from the United States.

Mex­ico has been buy­ing 25 per cent of U.S. pork and the Amer­i­can in­dus­try has re­cently ex­panded to meet Mex­i­can de­mand.

The warn­ing of a 10 per cent to 13 per cent drop in earn­ings sliced Tyson mar­ket value by $1 bil­lion. Pork is likely to take a big­ger price hit than beef. Beef makes up a small por­tion of ex­ports to China. Mean­while GM cut earn­ings pro­jec­tions by six per cent over tar­iffs. U.S. farm­ers are fac­ing a 12-year low in in­come this year from lower trend­ing prices even with­out the im­pact of trade wars and tar­iffs.

Given that sce­nario, the pres­i­dent an­nounced a $12 bil­lion di­rect pay­ment to farm­ers for soy­beans, sorghum, corn, cot­ton, dairy, beef and pork. Pay­ments should start in Septem­ber. Some ob­servers won­der how the $12 bil­lion sub­sidy will im­pact farm land prices. Sud­den cash in­jec­tions tend to drive up prices.

The fall­out from lower com­mod­ity prices will dam­age Canadian farm in­comes as prices de­cline.

In mid-July Bloomberg re­ported 26 raw ma­te­rial prices de­clined an av­er­age of 2.7 per cent in one week — the most since Fe­bru­ary. Soy­beans dropped 6.2 per cent that week. Soy­beans are still be­ing ex­ported from United States to China with a 25 per cent tar­iff. Even if China buys the Brazil­ian and Ar­gen­tine crops it will be 20 mil­lion tonnes short of needs. Brazil­ian soy­bean farm­ers en­joy sud­denly sky­rock­et­ing prices.

The U.S. Depart­ment of Agri­cul­ture es­ti­mates Chi­nese soy­bean pur­chases from the U.S. will fall for the first time in 15 years and leave a hole in ex­ports.

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