President Trump’s unilateral tariffs against China sparked an effective boycott of American soybeans in the first major battleground of his tariff war. China’s response disproportionately harms Midwestern states, many of which are heavy backers of the protectionist Republican Party and Trump.
American farmers just lost more than 62,000 metric tons of soybean orders because China cancelled orders and has turned to exclusively foreign sources of the commodity.
Donald Trump raised tariffs on $50 billion worth of Chinese goods – which become taxes that ultimately get passed onto consumers – and last month, their government raised tariffs on soybeans. Today’s news shows that the battleground for trade wars won’t just about tariffs, it can also be about angry countries voting with their wallets. Bloomberg reports:
“Whatever they’re buying is non-U.S.,” Bunge Ltd. Chief Executive Officer Soren Schroder said in a telephone interview Wednesday. “They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S.”
It’s “very clear” that the trade tensions have already stopped China from buying U.S. supplies, Schroder said. “How long that will last, who knows? But so long as there is this big cloud of uncertainty, that’s likely to continue.”
President Trump intentionally caused a trade war with China by raising tariffs and celebrated it on Twitter just over two months ago.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
China is the largest importer of soybeans in the world, and losing their business must be pummeling the farmers depending on those sales to pay their bills and mortgages, many of them located in the American midwest, which voted overwhelmingly for Trump in the last presidential election.
US Department of Agriculture reports from 2016 show that China imports 10 times the amount of soybeans from American farmers than any other country.
In fact, the targeting of this action is no accident, as the Chinese government seeks to increase targeted pressure against the Trump Administration. The South China Morning Post reports:
The tariffs on soybeans have grabbed much of the attention because they are America’s biggest single export to China, and will affect a number of rural states that heavily backed Trump in the 2016 presidential election, but many of the other measures will also hit farmers across Red State America.
USDA statistics for 2015 identify Illinois is the top soybean producer state in America, followed closely by red state Iowa, then Minnesota and then heavily Republican voting states Nebraska, Indiana, Ohio, South Dakota, Arkansas, and Kansas. (chart below)
Republican tariffs contributed to the last Great Depression during the 1930s, which wiped out America’s breadbasket, combined with an early man-made climate change effect that turned the plains into the Dust Bowl.
In fact, the stock market crash known as Black Thursday happened when Wall Street traders sold everything in anticipation of sweeping tariffs, which caused stock prices to plummet and wipe out speculators.
Now, America’s farmers are about to take a bullet because of their reckless votes in favor of the Republican Party and President Trump’s protectionist policies, but the entire country could eventually feel the pinch.
This is the USDA’s chart of the value of soybean production in America by State as of 2016: