Trade

China Will Completely Cut Off American Farm Goods

JM Ashby
Written by JM Ashby

Although exports of American farm goods to China dropped by nearly 90 percent after Trump dramatically escalated his trade war in the summer of 2018 by imposing tariffs on over $200 billion in Chinese goods, exports never hit zero. Private firms stopped importing American goods last year, but China's state-owned firms continued to import a limited amount of American agricultural products ever since then to meet demand.

Now that Trump has escalated his trade war yet again by announcing tariffs on all remaining Chinese goods not already subject to tariffs, China has ordered state-owned firms to stop importing American farm goods.

More ironically, private firms that recently displayed interest in buying a limited amount of American farm goods after being granted tariff exemptions as part of Trump's "truce" with Chinese President Xi Jinping have decided not to make any new purchases.

From Bloomberg:

The Chinese government has asked its state-owned enterprises to suspend purchases of U.S. agricultural products, people familiar with the situation said. Also, privately run Chinese crushers that had received retaliatory-tariff waivers on American soybeans from Beijing have stopped buying the commodity due to uncertainty over trade relations, other people said. [...]

Bureaucrats in Beijing were stunned by Trump’s announcement, according to Chinese officials who’ve been involved in the trade talks, and Beijing has pledged to respond if the U.S. insists on adding the extra tariffs.

China’s state-run agricultural firms have now stopped buying American farm goods, and are waiting to see how talks progress, the people said, declining to be identified as they’re not authorized to speak to the media.

Based on other reporting, it appears that small orders placed over the last couple weeks could still be fulfilled, but there will be no new purchases after today.

Orders that were placed in recent weeks are not due for shipment until later this year so it seems reasonable to anticipate that those orders will also be canceled after Trump's next tariffs officially hit the books.

You may recall that American farm income dropped by more than the total value of Trump's first bailout during the first quarter of this year. I can't see any reason to think it won't drop even further and eclipse the value of Trump's second bailout even though his second bailout is bigger.

Bailouts are no replacement for access to foreign consumers.

  • muselet

    “Trade wars are good, and easy to win.” –Donald John Trump, March 2, 2018 (on Twitter)

    Since Donald Trump seems incapable of learning, it’s likely he still believes this, all available evidence to the contrary.

    –alopecia

    • Of course he believes they’re easy to win. He’s used to people rolling over for him the moment he threatens them.

      He’s now furious that they won’t play his game, show their bellies and let him WIN, WIN, WIN!

  • Draxiar

    How long before he gets completely rabid with confusion and starts imposing tariffs on domestic goods sold domestically?