Chinese & U.S. Trade Questioned Following Announcement of Tariffs on Goods

Conjecture of impending trade war with China has spread like wildfire as the Trump Administration announced intentions to subject 1,300 Chinese products to a 25% duty. Although the theft of intellectual property initially was raised as the reason, other issues at play could justify tariffs placed against Chinese goods. China responded with its own 25% tariff on U.S. products in retaliation against the Trump administration’s plans to assess tariffs.

In the days following the announcement, increases in threats have caused significant concern of a trade war ramping up between the United States and China. U.S. agriculture will be negatively affected by issues of trade with China, however considering the overall value of marketed goods to China raises other questions to what is really going on here.

China has long been known to make promises to ensure trade continues unimpeded. This is not the first go-around the U.S. has had with China on trade, currency manipulations, civil rights violations, and more. The result has been China agreeing to terms that they then, and often, fail to comply with in the long-term. The Chinese market size is what works in their favor, but access to that market for numerous goods has been impeded by Chinese intervention throughout the years. With population as its primary bargaining chip, it makes it a dispute worth playing out now, versus in the future, when a larger access to their market is captured.

Today, the effect on Kansas producers is significant. In 2017, China accounted for more than $100 million of Kansas’ agricultural exports. That’s about 3.3% of all agricultural exports for the state. The list of items China will impose a 25 percent tariff includes: beef, wheat, corn and soybeans. Those items make up more than half of all of Kansas’ international agriculture exports. Soybeans are particularly vulnerable to the new tariffs, because China is one of the industry’s largest customers. China bought one-third of the U.S. soybean crop last year.

However, many Kansas Ag producers have lost revenue over the years due to unbalanced trade deals, and Trump campaigned on the promise to dispose of unbalanced trade deals. As with United States cattle producers, the value of beef exported to foreign markets carries a premium over that marketed domestically, so access to foreign markets is traditionally a wise business decision. However, without regulations protecting the United States brand, and outlining strict country of origin restrictions, imports of foreign product into a United States market where domestic production meets or exceeds demand, only functions to dilute the value of domestic production marketed locally. Comparably, U.S. producers raise and process some of the finest quality beef in the World. Without providing a distinction to the U.S. consumer of foreign versus domestic production, and standing strong to protect our sovereignty, the U.S. producer suffers from inferior foreign beef on the U.S. dinner table.

Kansas Cattlemen’s Association supports keeping trade quotas and tariffs in negotiations of trade talks, so the cattle industry is fairly represented. In addition, KCA supports disease prevention protocols that are equal to or above USDA standards.