Regardless of international objections, the Trump administration decided to impose a 25% tariff on steel imports and a 10% tariff on aluminum from China and other countries on March 23 -- a violation of World Trade Organization rules as cited by the National Hog Farmer. Trump promised voters while campaigning for president that he would curb foreign imports to create American jobs. Instead, China retaliated with $3 billion in tariffs of its own against 128 American exports including agricultural products and steel pipe on April 2nd. Eleven hours later Trump hit back with a 25% tariff on 1,300 additional Chinese industrial, technology, transport, and medical products to punish the second largest economy over intellectual property violations.
In the tit-for-tat climate between Trump and the Chinese government similar things were added to major American imports including soybeans, planes, cars, beef, and chemicals.
American agriculture hit hardest by Chinese tariffs
American farmers, fruit and vegetable growers, pork producers, and winemakers were hardest hit. Successful farming cited that it benefits China to buy meat from large private pork producers in the United States that have integrated into packing because U.S. pigs are regulated by the United States Department of Agriculture (USDA) to guarantee they are not injected with antibiotics and are disease free, unlike Chinese producers. Small and mid-size American hog farmers would be devasted under the new tariffs as the price farmers are paid per pound for their pigs at the sale barns would go down, while consumers would pay more per pound for pork as meat packing plants pass the increase on to consumers at grocers.
The same scenario will apply to the cost of nuts, wine, and fruit at the grocery store, among other items. American farmers, including those in California and midwestern states, are the largest exporters of beef, sorghum, soybeans, pork, and milo to China. Trump's list of new tariffs against China related to the issue of intellectual property was published on Tuesday and China immediately responded by saying if the new tariffs go through, they will add tariffs to even more American products, specifically chemicals, corn products, orange juice, whiskey, and beef.
U.S. manufacturers and farmers worry about a trade war
Farmers can barely stay afloat with the high cost of seed, animal feed, and farm equipment. With a drought looming on the horizon across the Midwest and West coast that would also drive up the cost for feed, corn, and products made from grain, along with the Chinese retaliatory tariffs, there is a growing fear that this could turn into a trade war that would add to the problem.
A March 22 CNN Money report had already cited that Trump's steel tariffs were expected to cost manufacturers of plane engines, auto parts, and building materials more to produce products. And with American farmers now in China's crosshairs, things could get uglier. According to a National Hog Farmer report, American hog farmers and meat packing plants sold $1.1 billion worth of pork and pork products to China in 2017 -- with that number slated to rise this year. NPPC President Jim Heimerl, a pork producer from Johnstown, Ohio, stated that tariffs on exports going to China would harm producers and undermine the rural economy.
China's retaliatory tariffs on American goods also pummeled stocks around the world, sent shares of chipmakers, manufacturers and machinery companies down sharply, and set the U.S. stock market up for a fall at the opening bell -- as cited by Morningstar on April 4.
So far, there is no end in sight.
