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Mt. Pleasant News   Wash Journal
Neighbors Growing Together | Sep 22, 2018

Ag takes brunt of U.S.-China trade tiff

By Charles Brown | Jun 28, 2018

To the editor:

Why do U.S. farmers need export markets? There are many reasons, but here are a few: that’s where the customers are, that’s where the economic growth is, that’s where the consumption growth is, we produce surpluses, we only eat the best cuts of our meat and exports are crucial to farm income.

Ninety-six percent of the world’s population lives outside the U.S. The U.S. exports about 20 percent of its agricultural products. This amounts to about $140 billion annually. 2016 records show that U.S. exports 50 percent of its soybeans, 15 percent of its corn, 20 percent of its pork, 15 percent of its dairy, 15 percent of its poultry and 10 percent of its beef.

The attached graph shows the Top 10 countries that we export to.

As you can see our three largest trading countries, Mexico, Canada and China are the countries that we are currently in trade disputes with. In 2017, China imported 60 percent of the total U.S. soybean exports at a value of about $14 billion.

On Monday [June 18], President Donald Trump announced that $200 billion in additional Chinese goods will be hit with a 10 percent tariff. This was in addition to an already proposed 25 percent tariff. China responded with a 25 percent tariff on $50 billion on American goods, including soybeans.

Soybean prices are already down about $1.50 since the end of May and will most likely decline further if the trade war continues.

The U.S. accuses China of using predatory tactics to supplant American technological supremacy. As a price of admission to China’s markets, foreign companies are forced to hand over their technology. China’s long-range plan is to lead the world in information technology, robotics, biopharmaceuticals, aerospace equipment, etc.

So, for the time being, China and the U.S. seem to be in a game of chicken and we will have to wait and see who blinks first. In the meantime, agriculture will be taking the brunt of the lost income at a time of already depressed prices.

 

– Charles Brown, farm management specialist for Iowa State University Extension & Outreach

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