Commodity prices are falling in the wake of President Trump’s threat of round after round of tariffs on China, and on Tuesday, groups representing wheat and soybean growers warned that the White House is making trouble for U.S. agriculture with its aggressive tactics. Trump believes he will win the fight, so farmers will have to endure the turmoil, said Iowa Sen. Chuck Grassley, adding, “I’m kind of scared for agriculture.”
“Soybean prices are falling as a direct result of this trade feud,” said John Heisdorffer, president of the American Soybean Association, a farm group. The National Association of Wheat Growers lamented that the administration “is doubling down on a policy that makes an already risky business of agriculture even riskier … and the administration’s vague promise of protection for the farmers we represent offers little consolation.”
After China parried U.S. tariffs on $50 billion of its high-tech products with tariffs on $50 billion of U.S. exports, Trump said that unless China backed off, it would face additional tariffs on $200 billion of exports. Another $200 billion round would follow if China retaliated further. “Our phone lines are open. They always have been open” for negotiations, said trade advisor Peter Navarro. “But there is a fundamental reality here, and that is that talk is cheap.”
During a White House briefing, Navarro said, “President Trump will have the backs of all Americans who may be targeted by Chinese actions. I can assure you we are not unprepared. President Trump and [Agriculture Secretary] Sonny Perdue will be there for the American farmers.” During a speech to small-business owners, Trump said, “I love the American farmer more than anybody. They have backed me. I love the American farmer.”
Soybean futures prices are down by nearly 20 percent since May 29, and corn futures are down by 16 percent since May 24, tweeted economist Scott Irwin of the University of Illinois. “As far as I am concerned we have now officially moved into disaster territory for Trump, Trade, and Soybeans.”
On Tuesday, soybean futures were at their lowest price in Chicago since March 2016, said the Financial Times, quoting commodity broker Oliver Sloup of Blue Line Futures as saying, “It’s a little bit of a bloodbath.” Soybean prices tumbled by nearly 4 percent on Tuesday, corn was down by 1 percent, and wheat was down by 2 percent.
“The political reality is the president believes he will win eventually,” said Grassley during a teleconference when asked if farmers will have to suffer Chinese retaliation. “It looks to me like all we can do … is let him know how bad it is for agriculture.”
Trump imposed tariffs on Chinese steel and aluminum in April on the grounds the metals were being sold at unfairly low prices and hurting U.S. manufacturers. The planned tariffs on high-tech goods are punishment for the theft of intellectual property from U.S. firms, said the White House. They are set to take effect on July 6, as are China’s retaliatory tariffs on products that include U.S. soybeans, beef, cotton, corn, ethanol, dried distillers’ grains, grain sorghum, wheat, cranberries, orange juice, tobacco, and whiskey, along with industrial products. The targeted farm goods account for $17.3 billion in annual sales to China, the largest customer for U.S. farm exports.
“I don’t think we’re in a suicide pact on this so I suspect we’re not going to cause the economies to collapse,” said Goldman Sachs chief executive Lloyd Blankfein in a Bloomberg interview. “I do think — as some people have commented — that this is part of a negotiating pattern. That would be my best take.”
Trump has said his administration will shield farmers from unfair Chinese actions, although Perdue has declined to say how or when assistance would be available.
Farm groups say they prefer resolving U.S.-China trade disputes through negotiation rather than confrontation.