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.

everything
everything

China's been winning for a long time. We subsidized the soy, and dumped it on China all along, other growers have already been stepping up, as is China itself. They are not dumb, why be over reliant on any one for anything, and if you are, then make a change.

Blacklisted
Blacklisted

Cherry picking one commodity is something I would expect from someone far less informed. The fact is China needs us much more than we need them, and while no one should want a trade war, if the other side continues to impose sanctions, tough love is required.

You would say, if China wants to ship us goods for free, we should be happy, but the companies displaced would not be happy. So, why are you now worried about soy bean farmers? There's always sacrifices, but if the net effect is better, its worth it. One better example is shutting down the govt to stop deficit spending. This is actually a win-win, as you get govt employees out of the way in the short-term, and we stop digging the debt hole.

Brother
Brother

Those farmers need to change up their customers clearly selling your entire crop to export doesn't hardly break even. Selling farm to table you can down size and profit. Subsidies are going to global agri business who knew?

Realist
Realist

As predicted, no one is “winning” this “trade war”. American farmers are losing. The Chinese are also losing. The Chinese government has almost completely stopped the import of US soybeans. Their 2-pronged strategy is to buy soybeans from anyone but the US (mostly Brazil). Since there are not enough other sources to meet their needs they are telling pig farmers (who use soybeans for feed) to substitute other feeds where possible, or simply use less. Over the next few months this strategy will be tested as Brazil’s recent harvest is now essentially all purchased. Meanwhile US soybeans are being stockpiled and beginning to rot in the fields. This is the stupidity of trade wars. Hopefully in the next few months both sides will “blink” before the soybeans rot.