05/01/2020 No. 155
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US-China trade disputes could hit America's heartland hard
By Xinhua
June 1, 2018

DENVER, the United States - American farmers have been bracing for a tariffs race between the United States and China ignited by the Trump - economic shots that would likely hurt America's historic heartland. 


Since China's response to US President Donald Trump's tariffs hike policy announced in March, economists have delved into extensive analysis and gloomy prognostication from the disputes. 


The biggest losers in US trade disputes with China could be corn & soybean farmers from the American heartland, not to speak of US wheat growers


"The cards are on the table and there's no mystery to China's next move," said David Richardson, a political analyst from Washington DC.


"With each of Trump's tariffs, China will strike back, and the impact will be worse than indicated by initial economic reports and especially the US media," Richardson warned Monday.


"Long-term, adverse consequences," said Vince Smith, an economist at Montana State University. 




Experts say the ripples of pain from America's vast heartland, still considered "The Breadbasket of the World," also strike at the very core of America's historic, cultural fabric.


"Wheat is called the sacred crop from the Bible, our daily bread, and also is called 'amber waves of grain' in America the Beautiful," said Brad Erker, executive director of the Colorado Association of Wheat Growers (CAWG).


America the Beautiful glorifies the country's vast wheat fields, calling them "amber waves of grain," that cover more than 2.6 million square km from Texas to North Dakota. 
More than 160,000 US farms in 42 states contribute to wheat production, according to the 2007 Agriculture Census. Two-thirds of these farms are in America's Great Plains that stretch west from the Mississippi River to the Rocky Mountains.


Nationwide, farmers devote more than 45 million acres to wheat production each year. 
But even bigger agriculture losers in US trade disputes with China will be corn and soybean farmers, according to Smith, an agricultural economist specializing in international trade.


Soybeans yield annual revenues of US$38 billion, US Department of Agriculture (USDA) statistics show, and the industry is in the cross-hairs of the retaliatory salvo with potential losses in the billions alone, experts say.


US export data shows China's 1,085 million bushels (mb) a year dwarfing other top soy recipients: EU (167 mb), Mexico (131 mb), Japan (80 mb), according to USDA statistics. 
With China importing 90 percent of its soybean needs and 34 percent of these coming from the United States, signs are clear that looming economic hardship could be severe, according to Dutch multinational banking company Rabobank.


Rabobank, a leading financial services provider for the agri-business sector, said that US farmers could be driven to reduce soybean acres, while South American farmers will see an expansion of their harvest.


The company predicts a rise in the prices of all soy products to the American consumer, and notes that "if all proposed duties took effect, 40 percent of the US exports to China would be affected but only 10 percent of China's exports to the United States (would be)."




In the wheat industry, Montana was America's third-largest producing state in 2017 behind Kansas and North Dakota, according to the USDA. 


"Not many options," said Montana State University Professor Anton Bekkerman, on the future of the American wheat farmers.


Already, North Dakota farmers have shifted away from wheat production, and the ripple effect of the upcoming tariffs might include America's fragile involvement in the North Atlantic Free Trade Agreement (NAFTA), according to Bekkerman, a well-published agricultural economics expert.


"If additional strings are placed on the NAFTA structure then we're going to lose a major market," Bekkerman said, noting that in 2017 NAFTA was the country's top importer of wheat.


Countries like Mexico are already looking for other places to buy wheat, and that strain is getting producers worried, Bekkerman told Xinhua.


With China, the European Union and India producing more wheat than US farmers, according to the USDA, buyers may start looking to other global producers to meet their needs, thus leaving America in the lurch, experts told Xinhua.


Survival for the American farmer may mean focusing on "quality" or receiving federal subsidies to pay the bills, experts said.


"China is growing like crazy with an expanding middle class," said Bekkerman. "They want quality products and that is an area where we can always deliver."


The owners of America's 2 million farms have been historically conservative and oppose government bailouts and subsidies, but Trump Administration officials are already mentioning this possibility.


"There are new rumors that Trump and (Secretary of Agriculture Sonny) Perdue will enact domestic policies to keep prices up for farmers," Erker told Xinhua. 
"These domestic policies would mean subsidies -- a price borne by taxpayers in the United States, and nobody wants that," Erker said.    

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