Fallout of US trade wars on global agriculture

During the first week of December, US President Donald Trump and Chinese President Xi Jinping agreed to halt the introduction of new trade tariffs for 90 days to allow for talks between the two countries.

During the course of 2018, trade tensions between the

US and other major global economies escalated markedly.

The US imposed tariffs amounting to US$250 billion (about R3,5 trillion) on steel, aluminium, and electronics imported from China, which in turn launched punitive import tariffs of US$50 billion (about R700 billion) on soya bean, dairy, pork, apples, potatoes, cotton, maize, and tobacco, among other goods, from the US.

Trump said he believed that Beijing was using “unfair” trade practices to gain an advantage over the US, including the lax observation of the intellectual property law, which had led to the large US trade deficit with China.

Trump also reportedly wanted to renegotiate the terms of the North American Free Trade Agreement (NAFTA), signed in 1994, and used similar tariffs to apply pressure on Mexico and Canada. Canada hit back by imposing tariffs on more than 100 US products, while Mexico targeted more than a dozen agricultural products, including pork and cheese.

This ultimately led to a renewed trilateral agreement between the countries, called the United States-Mexico-Canada Agreement.

Similarly describing the state of trade between the US and the EU as “unfair”, as trade data showed a large trade surplus for the EU, Trump also imposed tariffs on those countries. The EU launched retaliatory tariffs worth US$3,4bn (R47,5 billion) on a wide variety of products.

Most economists agreed that further escalation of these trade disputes would hurt the US economy most, and potentially reduce that country’s economic growth about 5%, while life for struggling US farmers would become harder. Farmers producing maize, soya bean, milk and beef were already suffering due to weak global demand and low prices, according to economists. In September, the fallout of the trade disputes forced the US Department of Agriculture to launch a US$25,8 million (R360 million) aid package for US farmers.