“What?” Treasury Secretary Scott Bescent said after China announced sudden retaliatory tariffs on US exports on Wednesday.
The issue underscored the Trump administration's claim that America has the advantage in the trade war with China, given the extent to which the economy is dependent on exports to the United States.
The US purchases far more products from China than China buys from the US. But Beijing's decision to retaliate against the tariffs punished by President Trump by increasing the tax on US imports to 84% was even more stinging than Bescent could allow.
“American companies that sell to China and have made it successful cannot do that in order to retaliate,” said Sean Stein, president of the U.S.-China Business Council, hours before Trump ratcheted the tariffs again.
“The Chinese and US tariffs cover everything,” Stein added. So everything from aviation to medical imaging to agriculture will be affected, and “trade will be slower,” he said.
The US exported $143.5 billion in goods to China last year, importing $438.9 billion from the country, according to the US Trade Representative.
China's losses as an export market have particularly difficult economic blows to agricultural workers in many red states, and clashes with many voters who helped Trump win the presidential election. On Wednesday, Trump even more praised the US tariffs on China as he launched a moratorium on “mutual” tariffs he imposed on other countries. This reprieve provides little relief to farmers who are concerned that a long-term trade war with China will cut ties with the biggest export market.
The first trade war with China, which lasted from 2018 to 2019, lost billions of dollars in revenue for American farmers. To offset the losses, Trump handed out $23 billion in grants from the fund that the Agriculture Department created to stabilize the agricultural sector. The operations and farmers of large farms in the South have benefited most, raising concerns about equity and some farmers feel cheated.
The soybean industry is one of the sectors most interested in retaliation today. China is America's largest soybean export market, but when Trump imposed tariffs on Chinese products during his first term, Beijing retaliated by purchasing soybeans from other countries, including Brazil.
“If this continues for a long period of time, a considerable number of farmers will be out of business,” said Caleb Ragland, Kentucky Farmer, president of the American Soybean Association. “We still carry the scars from the last trade war.”
The American Soybean Association has urged the Trump administration to launch a new trade deal with China to avoid a long-term trade war.
US corn farmers, who sell about 2% of their products to China, also have an edge in the trade battle. They welcomed Trump's decision to suspend tariffs in other countries that could lead to retaliation against farmers and other American businesses. But they urged the Trump administration to focus on negotiations to open access to the market.
“The longer that uncertainty, the more we become concerned that growers can harvest billions of bushels of corn that don't have a reliable market,” said Kenneth Hartman Jr., president of the National Association of Corn Growers. “Our farmers want to ensure that our customers both at home and abroad will purchase our products in a few months or years.”
The fears over the impact of tariffs came into view Wednesday as US trade representative Jamieson Greer testified before the House Committee on Roads and Means and faced questions from nervous Republicans about retaliation from other countries for US farm exports.
Rep. Darryn Rahood, a Republican from Illinois, praises what Trump is doing to address long-standing trade barriers, but said his constituents are concerned.
“When you talk to farmers, when you enter into a trade war, there is a lot of anxiety, a lot of stress, a lot of uncertainty, because the first pawn in a trade war is usually farming,” he said.
Greer replied, “Almost every country has announced it has no intention of retaliation,” except for China. Indonesia, India and many other countries “affirm that we have not retaliated,” he added, but some countries, such as Vietnam, are unilaterally providing tariffs on US agricultural products. Greer did not mention that Europe announced retaliation measures on Wednesday or that Canada had retaliated against previous tariffs.
Becent downplayed the impact of China's response Wednesday morning, claiming the Fox Business Network that the US has relatively little export to China.
“China can raise tariffs, what?” said Becent, who owns the $25 million North Dakota farmland he has to sell.
Retaliation could force the Trump administration to revive the relief to American farmers that were provided during his first term as president.
Agricultural secretary Brooke Rollins said Wednesday that such a relief package was being considered and “everything is on the table.”
At the White House Cabinet meeting on Thursday, Rollins pointed out that farmers and ranchers struggled due to inflation and were concerned about uncertainty about trade, but supported Trump's economic agenda.
“Your idea of using tariffs to ensure that we make proposals and put America first is not understanding that better than farmers and ranchers,” Rollins said. “The period of uncertainty we are in knowing that your vision will drive us into an era of prosperity.”
Trump was little clear about the ceasefire with China on Thursday, but the president expressed general optimism about economic relations.
When asked about the possibility of a deal with China, Trump said he hopes, “We're going to be doing very good things for both countries.”
The president initially welcomed the trade contracts he reached with China during his first term as a success, but China failed to respect the promises he made to buy a large amount of American produce. Meanwhile, almost all the tariff revenues that the United States used to provide relief to the agricultural industry, collected during the trade war.
Farmers generally resist government handouts, but Ragland of the American Soybean Association said that in this case federal relief may be needed.
“If we continue to be used as a negotiation tool and become a sacrificial lamb on behalf of the big picture, we need to have an economic package to help turn on the light,” he said.
Tony Rom Contribution report
