China could ratchet up its trade war tactics against the United States as President Donald Trump has escalated the trade war between the two nations this week.
Politico points out that China knows how to fight a trade war and could go beyond retaliatory tariffs next. China has been known to successfully encourage its 1.4 billion population to give up products from targeted countries, such as Big Macs, and make business harder for U.S. companies in China.
While China has far fewer U.S. imports to impose tariffs on, a trade expert told Politico: “The reality is the Chinese can do quite a bit to hurt U.S. companies in the Chinese market.” Tariffs that have yet to take effect will target U.S. agricultural products. Earlier this week, business and agriculture groups penned a letter to Congress seeking lawmakers involvement to reign in Trump’s trade agenda.
The group asked for congressional oversight, while detailing how Congress has the power to regulate foreign trade.
The White House announced today that it’s moving forward with 25 percent tariffs on up to $50 billion of Chinese products imported into the U.S. China responded in-kind, saying it will move swiftly to protect its interests. The speculation is Beijing will retaliate by imposing tariffs of its own on $50 billion in American exports, including agricultural products. Iowa Soybean Association President Bill Shipley of Nodaway released the following statement:
“The use of food as a weapon in trade disputes is of grave concern to Iowa and U.S. farmers. It threatens the security and stability of the people and economies of China and the United States, including millions of U.S. farm families.
“There are no winners in a trade war and one that includes soybeans will not start or end well. U.S. soybean prices have already plummeted by about $1 per bushel since the beginning of June. Prices will likely drop further should the tariffs be imposed. This will further pressure agricultural families and businesses already struggling with below break-even commodity prices. Duties on imported soybeans will also negatively impact China’s soy processors, animal and aquaculture producers and its people.
“An ongoing trade dispute with China risks stoking anti-Americanism sentiment that could jeopardize the strength of trade relations between the two countries that have taken U.S. soybean farmers nearly 35 years to develop.
“Iowa soybean farmers recognize the legitimate trade issues involving China and the U.S. We’re also keenly aware of the trade imbalance that exists between the two countries. China consumes nearly 62 percent of all soybeans traded globally. Approximately 33 percent of total U.S. soybean production is destined for China, fulfilling almost 40 percent of China’s total soybean imports. Ironically, U.S. soybean and agriculture can help improve the trade imbalance by increasing sales to China. This is a much better course of action than suspending sales.
“Farmers are resilient, resourceful and used to dealing with situations out of their control. The best way to counteract negative financial impacts of tariffs is to go on offense. The Iowa Soybean Association will continue to work with partners to build demand both here and abroad, find more efficient ways to export our product and ensure policies and regulations are fair and workable for farmers.”
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