Referred to as “the biggest trade war in economic history,” the trade war between China and the United States is shaping up to be as real as the critics are fearing. President Trump announced $50 billion in tariffs on Chinese imports in the beginning of July, with $34 billion already imposed and another $16 million expected in the coming weeks.
The administration threatened China on July 10 with $200 billion in additional tariffs in response to Chinese trade policies seen as a national security threat to the United States, according to U.S. Trade Representative Robert Lighthizer. The administration has said that maintaining the tariffs will pressure China to address trade complaints from the U.S., which include intellectual property theft.
On the campaign trail and now in office, Trump has put an emphasis on his ubiquitous slogan, “Make America Great Again.” What he is doing with this latest trade war is the exact opposite of making America great. In reality these tariffs between the two largest economies will have a lasting impression on his supporters and ultimately on rural America — otherwise known as “Trump Country.”
China’s biggest agricultural products in this deal are soybeans which are one of Mississippi’s top exported products and the largest U.S. agricultural export — this means that there will be dramatic changes in soybean shipments.
The United States Department of Agriculture reported that Mississippi exported a total of $109.7 million in soybeans in 2017 to China. According to Mississippi Today, days after Trump imposed the tariffs, soybean prices plummeted to a nine-year low as China sought to buy the crop from other countries. In fact, the country started to shift its purchases from U.S. farmers, and toward Brazilians. Other countries such as Thailand, Egypt and the Netherlands began increasing their purchases of U.S. soybeans.
Farmers will not be the only ones hurting from this deal as tensions between China and U.S. grow. The tariffs could also affect American manufacturers. The Peterson Institute for International Economics estimates that 85 percent of Chinese imports hit by Trump’s initial tariffs are machinery made in the United States. Because of that, U.S. manufacturers, will have to pay additional prices for parts and equipment.
In brief, it’s a trying time for U.S. farmers, with effects reaching coast-to-coast, as China has already turned to other soybean-producing countries. Right now, the damage is little, but in the long run, the tariffs will be hurtful for both economies if they continue to escalate. Furthermore, with a cost increase in products already, additional taxes will hurt supply chains. If demand in crops drop, then jobs will be in jeopardy and this could potentially lead the country into a recession.
Ethel Mwedziwendira is a journalism and political science major from McKinney, Texas.