Chinese trade turmoil adds to uncertainty for Missouri farmers
COLUMBIA - As Missouri farmers prepare for the spring planting season, trade relations between the U.S. and China are sowing seeds of uncertainty.
After the U.S. announced tariffs on $50 billion of Chinese imports, China announced intentions to impose a similar tariff on 106 American products. The proposed 25 percent tariffs target up to $50 billion in U.S. goods annually.
Those products include things like cars, whiskey and chemicals. But the tariffs will also apply to agricultural products like soybeans, pork, beef and corn—products that are particularly important to Missouri's rural and agribusiness economy.
For Missouri farmers, these trade threats from China amount to far more than a hill of beans. One in four rows of US soybeans is destined for export to China. And according to a study by the U.S. Soybean Export Council, Chinese soybean imports from the U.S. could drop by 70 percent if China moves forward with its proposed trade restrictions. Nations in South America stand ready to fill in the gap in U.S. soybean exports to China.
MU agricultural economist Scott Brown said this trade volatility comes at an already difficult time for U.S. producers.
"The loss of potential trade with China can't come at a worse time, when we're already seeing increased production and lower prices," Brown said.
Brown said these fights with key trading partners like China are a mixed bag for consumers.
"In the short-run, as product backs up here in the US as a result of decreased trade, we might see lower food prices," Brown said. "But in the long term, as producers adjust, we might see marginally higher food prices as producers adjust to the new trade environment."
Pat Westhoff, director of the MU Food & Agricultural Policy Research Institute, said recent trade tensions among the U.S. and its NAFTA, EU and Asian trading partners are already complicating the economic outlook for American agribusinesses.
"Now, we've added uncertainty to what was already a pretty uncertain environment," Westhoff said. "The hope is that there might be some changes made in policies that will benefit the U.S. overall."
Both the U.S. and Chinese tariffs are still only proposals and have not yet taken effect. However, market uncertainty has already caused significant economic volatility, as evidenced by recent stock market tumbles.