Des Moines Register: "China Tariffs Could Cost Iowa Farmers Up to $624 million"

Iowa farmers are upset over Trump's tariff policy. Soybean exports will drop and the price is already falling.

Perhaps Iowa farmers' biggest fear is becoming a harsh reality: The escalating U.S.-China trade dispute erupted Friday, with each country vowing to levy 25 percent tariffs on $50 billion in goods.

U.S. and Iowa agriculture is caught in the crossfire, with farmers selling $14 billion in soybeans to China last year, its top export market.

Soybeans are among hundreds of U.S. products China has singled out for tariffs. The U.S. has an equally long list that includes taxing X-ray machines and other Chinese goods.

Iowa farmers could lose up to $624 million, depending on how long the tariffs are in place and the speed producers can find new markets for their soybeans, said Chad Hart, an Iowa State University economist.

U.S. soybean prices have fallen about 12 percent since March, when the U.S.-China trade dispute began.

Iowa is the nation's second-largest soybean grower, producing 562 million bushels last year worth $5.2 billion.

"It will slow down the market. Even with the tariffs in place, we will ship a lot of soybeans to China," Hart said. "It just won't be nearly the amount we did before.

China's Retaliation List

The $624 million figure is for soybeans alone. Iowa is hit by other products on China's retaliation list.

I discussed the list on June 15: Chinese Tariff List Translated, 545 Items: US Farmers and Automakers Clobbered

China's tariff list contains beef, pork, wheat, and corn.

Mike "Mish" Shedlock

Comments (17)
No. 1-17
JJKthree
JJKthree

This represents a 42% decrease in the average annual Taxpayer subsidy paid to Iowa farmers from 1995-2016. Small potatoes indeed compared to the $29.8 Billion they received in that 20 years.

Carl_R
Carl_R

Remember that the main point of farm subsidies is not to "help farmers", but rather to raise the farm output enough to assure that there is always a surplus produced, and that there is never, ever, a food shortage. It prevents marginal producers from going out of business, assuring over-production, and low prices.

hmk
hmk

I don't think that the sibsidies are justified. We complain when other countries do it. Also I believe that if one country stops buying from us another will to make up the difference. Soybeans demand is pretty fixed as well as production so the buyers world wide will just shift.

Realist
Realist

The US heavily subsidizes many industries, including agriculture. This results in overproduction of products like soybeans, milk, etc. Europe does the same thing. That’s why you see millions of gallons of milk being dumped/destroyed/wasted. Instead of wasting all that money to overproduce, the US could institute supply management programs that cost the taxpayer nothing. Imagine; no subsidies, no over production, no waste. Instead, the US attacks supply management in other countries, that simply produce what that country needs, as unfair to US farmers. It’s funny how the US is turning into a country that blames everyone else for its own stupidity.

Brother
Brother

It’s not the poor family farmer that’s effected. These are very large corporations taking US agribusiness subsidies to the tune of billions of US dollars. China is worried about a trade imbalance? What a joke…

Realist
Realist

If the US wants to subsidize something useful, they should subsidize training and skills upgrades for all those unemployed low-skills workers. Then they might be able to start filling the millions of high skilled jobs that currently sit empty in the US.

mbass100
mbass100

great news, they are getting what they voted for, isn't democracy great?

everything1
everything1

They can dump them. I live in WI, been driving down a side road, bumper season, and seen corn outside in open concrete barriers out in the open in the pouring rain, silos full. I've seen the expansion by local larger corn growers, they store their own corn in attempt to control price when they sell either into the commodity market, or to the ethanol plants.

Kinuachdrach
Kinuachdrach

So much inconsistency in the free trader position!

If the US unilaterally eliminates tariffs causing US consumer prices for imports to drop, that is a Good Thing. (Consumers are all-important; damage to US producers is ignored).

But if another country imposes tariffs on US exports causing US consumer prices for domestic products to drop, that is a Bad Thing. (To hell with consumers; damage to US producers is all-important).

When will free traders get their story straight?

Roadrunner12
Roadrunner12

Worldwide, the Canadian dairy industry looks to be the only dairy industry of any country that is not in turmoil. Is it the best system up for debate? Sanctions by China against U.S. dairy will create new alliances that if they become entrenched will only harm the U.S dairy industry further.

." What is clear is that a regulated system such as Canada’s provides greater stability across the value chain, whereas deregulation creates perpetual instability and unpredictability for farmers, processors, retailers and consumers. Across all systems – whether regulated, deregulated or mixed, governments play a direct or indirect role."

Stuki
Stuki

??????

Dude, even you should know better than that.

Imposing high enough banana tariffs on Eskimos to make it worth vile for them to spend their entire lives attempting to get just one to grow, increases banana prices for Eskimos, because growing them on the North Pole is is, let's say, a bit wasteful and inefficient.

This doesn't somehow make it beneficial for Eskimos, nor anyone else, that Panama increases tariffs on ice, needed to keep bananas cold during shipping, to the point where Panamanians are stuck wasting their lives trying to get water in the tropics to freeze. Even if this, in isolation and naively, would possibly lower the price of ice on the North Pole a bit. All the Eskimos get out of that one, is bananas that are rotten by the time they reach Greenland..

Instead of insisting on thinking (more like 'feeeeeling' your way) like a little girl oh-so preoccupied with mommy possibly giving her kid brother a bigger piece of cake than her: It's.All.About.Efficiency! The most efficient producer of a good should produce it. That way, more of it can be produced for less effort. Leaving more effort available to produce other things. Hence, obviously to anyone who bother thinking it through before mindlessly hyperventilating, increasing wealth. Hence, ice on Greenland. Bananas in Panama. Soybeans in Iowa. Iphones in China. Etc.... It's not a difficult story to get straight at all. Just remember: Efficiency. Nothing else. Ever.

The whole, entire, 100%, point of trade; any trade; and hence any economic "system," is to coordinate production such that those who can make something the most efficiently, does so. The rest is just arbitrary redistribution. From those capable enough to produce something efficiently, to those who instead focus on crying and screaming like spoiled children that gommiment should steal on their behalf. Pretending teft is somehow more acceptable, if attempted dressed up and disguised by petty, cheesy, childish, clueless and illiterate Newspeak.

Kinuachdrach
Kinuachdrach

Stuki wrote: “Instead of insisting on thinking (more like 'feeeeeling' your way) like a little girl …”.

When you don’t have a credible argument, attack the other person, heh?

Yes, political economy is about efficiency; but also about more than efficiency. Sadly, so many free traders end up sounding like those academic anti-American faculty lounge lizards relaxing in their taxpayer-provided Ivory Towers droning on about how Communism is the best economic system. Yes, in theory, Communism is the best economic system -- but only in theory. In reality, every Communist regime has ended up as a nasty dictatorship which has made life much worse for its citizens. Obviously, the theory is incomplete.

Kinuachdrach
Kinuachdrach

To paraphrase the great statistician George Box – ‘All theories are wrong; some theories are useful’. The theory of Comparative Advantage is useful to a certain extent, but it neglects many factors we are aware of from the real world. For example, what happens to the supposed consumer price benefits when the efficient producer clears out the competition and achieves a monopoly? Read up on the history of Standard Oil, and why anti-trust legislation was instituted.

Kinuachdrach
Kinuachdrach

History also tells us that large trade imbalances are unsustainable – and can end up being corrected in very unpleasant ways. The last time China ran a huge trade surplus was with the British Empire in the 1800s. The English responded by creating a market in China for opium sourced from English colonies in India. When the Chinese Emperor objected, the English then invaded China – twice! – to ensure they could continue to sell drugs. Of course, even Crooked Hillary would not have responded to today’s Chinese trade surplus by shipping meth to China; but the historical lesson stands that unsustainable trade surpluses end in tears.

Kinuachdrach
Kinuachdrach

Looking at the world today, it is clear that free traders have lost the battle in terms of public support … and even elite support. Think about the utter silence that greeted President Trump’s proposal at the G7 for a tariff-free world. My guess is that committed free traders would be better advised to push initially for reciprocal fair trade as a necessary step towards the long-term Trumpian goal of genuine multi-lateral free trade.

Stuki
Stuki

In what kind of "theory" is communism the "best" economic system???????? You're confusing theory with pure childish fantasy here. Again, it ain't that hard: Just look at efficiency: Unless any and all who has a hunch he can do something more efficient than how it's currently done; is fully unrestricted in putting his hunch to the test, efficiency suffers. Communism is all about restrictions. Hence has nothing to do with "best" of anything. Never did, never will. It was a progressive joke from the get-go, nothing more than yet another in a never ending line of Newspeakian attempts at excusing why some group of more equals should somehow rule their mere equal underlings.

Instead, what "system" is the best economically, is the same one that is best in all other ways. Pure, simple, unrestricted freedom. Think Jedediah Smith in the Rockies, '49ers in San Francisco. Not a darned five year plan, nor any other form of government anywhere in sight. That's what great societies are built from. While governments, laws, regulations and privileged institutions are what destroys them. America being a perfect example of both in action: From wilderness to the greatest country ever in a century of the first; then right back down to some dystopian TrumpObamastan in a century and a half of the latter.

Until you hear people crying in the street, complaining that they are just too free; that noone steals their stuff, noone harasses them and noone bans them from doing what they want to do, you can be pretty confident freedom is "the best system." Nothing else. Freedom to say and write what you want. To build what you want where you want. To buy what you want from whomever you want to. That's the "best system," period. In all ways. That it is also the best economically, is just a special case of thatt more general.