In the trade war of between China and Trump, farmers in the US are taking a huge hit. A $60 billion dollar hit, to be specific, from China’s variety of retaliatory tariffs on US agriculture exports.
Although the tariffs are expected to help encourage domestic purchases of agricultural products, they also threaten to turn US farmers away from Asian markets – many of which are the largest importers of US products in the world.
On September 24, 2018.China raised taxes on the following US products between 5-10%:
China has been one of the biggest importers of many US agricultural imports.
With raised prices, chinese markets are going to be less likely to purchase American-made products, and choose domestic instead. This is a serious threat to US farmers that make large portions of their income selling to Chinese markets.
The trade war between US and China largely started back in March 2018, when Trump announced the US would raise tariffs on Chinese steel and aluminum imports.This initial set of tariffs was a move to encourage US purchasing of lower-priced American-made products.
Since these tariffs, China has countered with their own tariffs placed in retaliation, and the US has fought back with additional levies of their own.
This back-and-forth created a trade war that now, unfortunately, US farmers are caught right in the middle of.
The question of whether the tariffs in place are helping or hurting US farmers is a matter of debate.
In a recent series of tweets, Trump stated:
“Tariffs are working big time. Every country on earth wants to take wealth out of the U.S., always to our detriment. I say, as they come,Tax them. If they don’t want to be taxed, let them make or build the product in the U.S. In either event, it means jobs and great wealth…..”
“..Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!”
In a CNBC interview with Mike Naig, the Iowa Agriculture Secretary, Naig stated the fact that farmers being hit by the Chinese tariffs are already troubled by a low crop yield. “This escalation of the trade conflict really couldn’t come at a worse time.”
While the trade war might be working for the US as a whole, the ruptured relationship with China is specifically hitting the agriculture industry the hardest.
According to the Washington Post, the Trump administration has already announced that it plans to raise tariffs on other huge agricultural trade partners including Mexico, Europe and Canada.
This in turn is likely to spark retaliatory tariffs on US farming products, which are likely to further harm US farmers as well as their relationships with said nations that they have spent many years building.
In these times, it is recommended that farmers start building as many new domestic relationships as possible. With no end to the trade war in site, focusing on building as many business and consumer relationships as possible will be invaluable in reducing costs and increasing sales in the many months to come.
President Trump issued a plan to provide over $12 billion in farm subsidies to those affected for financial relief, starting in September.
Has it been helping? Barely.
Although $12 billion sounds like a lot of cash, if you take into account how it’s divided between thousands of farms, the amount provided by these subsidies aren’t even able to help farmers break even from the profit they’re losing from breaking off from China.
Farmers barely have time for themselves as it is, let alone time to plan how to survive and grow during times of international conflict.
National Business Capital (NBC) has been helping hundreds of US farmers cut costs, increase cash flow and boost sales as Trump’s trade war continues to escalate.
If you would like a helping hand in preparing for the big changes to come, and thriving in spite of those already underway, call (877) 482-3008 to tell a Business Financing Advisor how they can help you grow.
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Matt Carrigan is the Content Writer at National Business Capital & Services. He loves spending every day creating content to educate business owners across every industry about business growth strategies, and how they can access the funding they need!