Wednesday, April 04, 2018

China announces, but doesn't schedule, tariffs on crops and other products that seem to target Trump's rural base

The day after President Trump announced tariffs on more than 1,300 Chinese products, China escalated the trade war, saying it would levy 25 percent tariffs on $50 billion worth of U.S. products. The import taxes will likely hurt the rural areas that voted for Trump. There is time for the U.S. and China to negotiate; Trump's latest tariffs won't take effect until after a public comment period ends May 11, and China has not said when the tariffs it announced today will take effect.

"China’s Ministry of Commerce on Wednesday said it plans to impose 25 percent duties on the commodity in addition to other U.S. agricultural produce including wheat, corn, cotton, sorghum, tobacco and beef," Alfred Cang and Phoebe Sedgman report for Bloomberg. "They’re among 106 products ranging from aircraft to chemicals targeted by Beijing in retaliation for proposed American duties on its high-tech goods." Other targeted products include tobacco, whiskey and orange juice, Don Lee and Jonathan Kaiman report for the Los Angeles Times.

China is America's biggest customer for soybeans and cotton, importing about $14 billion in soybeans alone last year. The announcement triggered a drop in soybean, corn and cotton futures, with soybeans falling as much as 5.3 percent to $9.835 a bushel. Sorghum has not yet been targeted for tariffs, but it's another vulnerable item, since China buys about 80 percent of U.S. sorghum exports, worth about $957 million in 2017. China pointedly began investigating sorghum imports from the U.S. after Trump imposed tariffs on steel and aluminum.

This round of tariffs seems to target Trump's rural base: "Trump won eight of the U.S.'s top-10 soy-exporting states in his 2016 election, according to the U.S. Department of Agriculture. Wisconsin and Michigan, both crucial swing states in the election, are also major soybean exporters," Lee and Kaiman report. "Whiskey, to take another example, is a prime product of Kentucky, the home of Senate Majority Leader Mitch McConnell, who has already expressed reservations about Trump's tariff policies. Orange juice is heavily produced in Florida, a key swing state."

Citing an analysis by the Brookings Institution, Greg Sargent of The Washington Post writes, "Agricultural communities are right to worry about what’s happening, but that’s not all: The data also show that other targeted industries should be worried as well. And it reveals that those who are vulnerable to negative impacts from these trade tensions are mostly concentrated in counties carried by Trump." Brookings analyzed the impact on "seven industries producing the products targeted by China’s retaliatory actions, which include fresh and dried fruit and nut farming, stainless steel pipes, pork products, modified ethanol, scrap aluminum and wineries," Sargent reports.

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