American farmers have endured the worst collateral damage of the United States – China trade war. Beijing imposed a 25-percent tariff on soybeans which compelled many private businesses to shift their imports from the U.S. to South American countries such as Brazil. While China was still the largest importer of U.S. soybeans in 2018, during the latter part of the year, it tapered off its business and in November, it imported none.
As stockpiles built up on U.S. farms, a majority of which are owned by large corporations, farmers began to feel the effect of the continued conflict which today only shows minimal signs of abating. The catastrophic agricultural climate prompted U.S. President Donald Trump to issue two rounds of government aid packages last year, but many small farmers felt little relief. Now, Trump has made public a plan to disburse $16 billion to U.S. farms with conditions that limit the aid to small, often family, operations instead of large businesses.
Furthermore, China has pledged to increase its agricultural imports from America and begun to receive shipments, making good on a promise between the two nations at the G20 Summit in June. According to a Chinese government report, “several million tonnes of soybeans” were imported since the deal was promised, but that number conflicts with U.S. Department of Agriculture data which showed only 1.02 tonnes. While those numbers only included purchase prior to July 18, it raises the question of whether or not Beijing is actually importing as much as it said it would. It’s also possible that the Chinese report was inaccurately including imports of other U.S. products such as cotton and pork.
While a bulk of the imports are made by the Chinese government, thus bypassing its own tariffs, there is a process by which companies can apply for exemptions and five have been approved so far. At the end of July, one private company purchased 68,000 tonnes making it the first company to do so in recent months. There is still an outstanding balance of 4 million tonnes of soybeans that have been paid for but not shipped.
On July 19, officials from Beijing met with industry leaders to make them aware of a government plan to increase its agricultural imports from the U.S. It remains to be seen, however, if tariff exemptions will be enough to turn companies back to American products. As it stands, the price of American soybeans has fallen to its lowest point in five years, but Brazil, for example, is more competitive when factoring in tariffs. Representatives from Beijing and Washington met this week in Shanghai for trade discussions, but nothing firm came from the meetings aside from planning to meet again in early September.
Beijing officials did confirm “its commitment to increase purchases of United State agricultural exports,” according to a White House statement following the meeting. As with the import data, however, the Chinese account of the meeting painted a different picture. Xinhua, the Chinese official news outlet, reported that the state would increase purchases to satisfy its needs contingent upon “favorable conditions” by the U.S. Reading between the lines, it seems as if Beijing is hinging its actions on future developments in the ongoing trade dispute.
Unfortunately for American farmers, Trump recently announced new tariffs beginning September 1 on $300 billion of Chinese goods. From Trump’s standpoint, he is turning up the pressure to get a trade deal ironed out, but any such agreement will not come in time to avoid the new round of tariffs. While China can retaliate as it has in the past with tariffs of its own, it could also simply scale down its plan to import more agricultural products. Doing so puts American farmers in the precarious position of supporting the president during an upcoming election year, a president whose policies are hurting them the worst.
This plays into Beijing’s plan of turning farmers against the Trump administration. Traditionally, they tend to vote overwhelmingly Republican. Although Trump is unleashing a sizable aid package for farmers, there is a growing feeling that it is too little and too late. Seen as a stopgap measure, a bailout can only support farmers for so long in lieu of an end to the trade war.
“This trade thing is what’s brought on by the president and it’s really frustrating because he took away all of our markets,” Bob Kuylen, a North Dakotan farmer. Kuylen grows wheat and sunflowers, the former of which has been hit just as heavily as soybeans. Instead of buying American wheat, China now buys from Russia.
Farmers depend on stability and small farmers in particular survive on thin profit margins. When there are no buyers and they must rely on the government for relief, the situation breeds discontent and worry. A longterm solution is in their best interests, and Trump’s as well. With the primary election season already underway, his policies which hurt farmers gives more ammunition to potential Democratic challengers and greatly risks alienating a historically solid conservative base of voters.