Trump's Trade War With China: The US is Not Winning

Think trade wars are easy to win? Think again.

The Independent reports US soybean exports to China down 94% because of Trump tariffs.

> President Donald Trump’s 'America First' trade policies have led to a 94 per cent cut in US soybean exports to China, forcing farmers in America’s midwest to stockpile crops and hope relief comes before the rot.

> After decades in which American soybean farmers were able to build considerable business by selling a huge share of their crop to China, farmers across the US are seeing the largest market destination for one of the country’s largest crops drying up.

> “We’re sitting on the edge of our seat,” Kevin Karel, the general manager of the Arthur Companies, a soybean seller, told The New York Times. Mr Karel’s company has begun stockpiling soybeans outside, and they plan on laying a tarp over the product to extend its life. He said he hopes a solution can be found before that crop rots.

This Tweet by Brad Setser sums up the current state of affairs in a single Tweet.

Not to fear. I have it on good authority that trade wars are good and easy to win.

Mike "Mish" Shedlock

Comments (26)
No. 1-9
Sechel
Sechel

not about winning. its about placating the base

Realist
Realist

I agree with Sechel. Focus your supporters anger at some “enemy” and promise to solve their problem by punishing the “enemy”. The fact that it doesn’t actually work, doesn’t matter. Tariff wars are lose-lose.

2banana
2banana

How much of this are importers to the States rushing in products before the major tariffs take effect come the New Year?

Kinuachdrach
Kinuachdrach

It would be interesting to see the whole story on Bean Wars. Are Chinese people going hungry? Is China still buying all the US soy beans it needs through cut-outs like Iran or Dubai (maybe at a premium)? Are global trade patterns shifting, with other countries selling soy beans to China (at a premium) while US suppliers sell to the former customers of those countries?

Let’s recognize that talking about “Trump’s trade war” is about as historically inaccurate as claiming WWII began when General Eisenhower invaded Normandy. China has clearly been waging a trade war against the US for decades with the connivance of the usual suspects in the US, as demonstrated by the unsustainable trade imbalance. Finally, the US has a President who has started to fight back.

How will that unsustainable trade imbalance eventually get corrected? Standard theory says that the US dollar will fall in value, making Chinese imports too expensive for US consumers. This will dramatically reduce the standard of living for everyone in the US, which in turn will wipe out many US investors. Or do free traders see a less traumatic end to China’s trade war against the US?

Carl_R
Carl_R

The background is that the tax cut gave Americans more money to spend, and a large portion of consumer goods come from China, so it's not surprising to see imports up.