Soybean farmers feel the effects of Trump’s trade war – Twin Cities

Whoever claimed trade wars are easy to win clearly wasn’t an American farmer. Witness the enormous collateral damage America’s soybean producers are suffering amid President Trump’s trade war with China.

Exports of American soybeans to China have collapsed this year, with no new orders logged in recent months ahead of the prime autumn export season. Before Mr. Trump’s first round of tariffs on China in 2018, China was the largest export market for American soy. It typically bought about 30% of total U.S. soybean production and some 60% of American soybean exports. Those exports were worth $12.8 billion annually, the soybean farmers’ trade association reports.

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Beijing has made a concerted effort to diversify its supply of soybeans and related products since the first Trump Administration. Brazil and, more recently, Argentina have been the big winners.

Beijing also has imposed a 23% retaliatory tariff on American soybeans in response to Mr. Trump’s tariffs on Chinese imports this year. This adds some $2 per bushel to the cost of American soybeans sold in China, far outweighing an American production price advantage of 80 to 90 cents a bushel, Reuters reports. As a result, American farmers lose out on large advance orders since China buys from the U.S. only to fill gaps in South American and other production.

At least American soy farmers are in good company as China targets a range of American agricultural products for retaliation. Cattle ranchers are seeing Chinese demand for American beef dwindle as China shifts its consumption to imports from Australia.

The protectionists’ solution is to throw more subsidies at American farmers. Agriculture Secretary Brooke Rollins and Mr. Trump last month floated plans to use a portion of tariff revenue to write checks to farmers.

Mr. Trump said the handouts to farmers might continue “until the tariffs kick in to their benefit,” in which case Treasury will be making payouts for a long time. And talk about blowing a hole in protectionists’ argument that tariffs are free money for the government that can be used for other purposes.

Don’t mistake any of this for a Chinese victory per se. Beijing is forcing Chinese consumers — who have much lower per-capita incomes than Americans — to pay more for soy products than they otherwise would. Most recent data point to a marked deterioration as the Trump tariffs weigh on an economy already struggling with a property-market deflation and a crushing debt burden.