The Trade War Ramps Up

Jul 6, 2018  | 3 min  | Ep4346

An updated USDA report cites slowing global demand and large inventories for keeping a lid on farm sector net cash income. The forecast calls for 2018 profits below the 40 year average. ---

All those reports came out before the White House officially levied tariffs against the self-proclaimed “developing nation” of China.

Trump’s move is aimed at protecting the U.S. technology sector but has exposed American exports of soybeans, orange juice and bourbon to retaliation.

Peter Tubbs leads off our coverage. Producer Contact

President Donald Trump: “The war was lost on trade many years ago. You know when they're saying, not a free trader, I said no. The war was lost, but now we're going to win it and because we have all the cards."
The United States and China escalated their trade war this week, with both sides adding tariffs on each other’s exports, launching what Beijing called “The biggest trade war in economic history.”
The U.S. targeted $34 billion in Chinese products, 
while the Chinese retaliated with new tariffs on mostly agricultural goods. If the trade tiff continues, the Trump Administration has threatened tariffs on ninety percent of the goods China exports to the United States.
Erlend Ek, a Beijing-based analyst who tracks Chinese policies, sees risk if the global supply chains of other countries or trading blocs are disrupted.
Erlend Ek, Trade and Agriculture Research Manager at China Policy: "If a total global trade war breaks out, if the EU gets included and we see a lot of tit-for-tat, the Chinese have concluded that it might drop global trade worth 70 percent, and that will affect not only the economy but it will also affect national security. Because China needs energy, they need food, and they're doing domestic reforms now to become more dependent on global markets. 
China, the world’s second largest economy, purchases vast amounts of raw materials on world markets to feed its industrial base. But the country’s consumption of raw materials limits its leverage in a short term trade war.
Yu Zhi, Professor of Economics at the Shanghai University of Finance and Economics: “The US can impose tariffs on more Chinese products than China can do on the US products. Therefore, if the trade war really starts and is broadened, China will not have enough capacity to resist the pressure."
China’s stock market has dropped twelve percent in recent weeks, and the Yuan has lost 3 percent against the dollar since April.
Increased tariffs have darkened the balance sheets of American farmers. The 19% percent sell off in soybeans over the last five weeks has pulled $100 per acre out of potential revenues for the coming crop. 
For Market to Market, I’m Peter Tubbs
Grinnell Mutual Insurance