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Backfire economics: With soybeans piling up, farmers hope Trump’s trade war ends before their beans rot – Publications – AEI

Summary:
AEI Backfire economics: With soybeans piling up, farmers hope Trump’s trade war ends before their beans rot The New York Times reports today that while North Dakota’s soybean crops are flourishing China has stopped buying, putting many American grain farmers at great risk: This is harvest season in the rich farmlands of the eastern Dakotas, the time of year Kevin Karel checks his computer first thing in the morning to see how many of his soybeans Chinese companies have purchased while he was sleeping. Farmers here in Cass County have prospered over the last two decades by growing more soybeans than any other county in the United States, and by shipping most of those beans across the Pacific Ocean to feed Chinese pigs and chickens. But this year, the Chinese have all but stopped buying.

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Backfire economics: With soybeans piling up, farmers hope Trump’s trade war ends before their beans rot

Backfire economics: With soybeans piling up, farmers hope Trump’s trade war ends before their beans rot - Publications – AEI

The New York Times reports today that while North Dakota’s soybean crops are flourishing China has stopped buying, putting many American grain farmers at great risk:

This is harvest season in the rich farmlands of the eastern Dakotas, the time of year Kevin Karel checks his computer first thing in the morning to see how many of his soybeans Chinese companies have purchased while he was sleeping. Farmers here in Cass County have prospered over the last two decades by growing more soybeans than any other county in the United States, and by shipping most of those beans across the Pacific Ocean to feed Chinese pigs and chickens.

But this year, the Chinese have all but stopped buying. The largest market for one of America’s largest exports has shut its doors. The Chinese government imposed a tariff on American soybeans in response to the Trump administration’s tariffs on Chinese goods. Through mid-October, American soybean sales to China have declined by 94% from last year’s harvest.

……

President Trump sees tariffs as a tool to force changes in America’s economic relationships with China and other major trading partners. His tough approach, he says, will revive American industries like steel and auto manufacturing that have lost ground to foreign rivals. But that is coming at a steep cost for some industries, like farming, that have thrived in the era of globalization by exporting goods to foreign markets.

Greg Gebeke, who farms 5,000 acres outside Arthur with two of his brothers, said he struggled to understand the administration’s goals. “I’m trying to follow and figure out who the winners are in this tariff war,” Mr. Gebeke said. “I know who one of the losers are and that’s us. And that’s painful.”

……

As China swallows the world’s supply of non-American soybeans, other countries are buying more beans from the United States, especially European nations that usually import beans from Brazil. Some nations that grow soybeans, like Canada, are shipping their own beans to China at high prices and then buying American beans at lower prices to meet domestic demand. Taiwan signed a deal to buy more American soybeans over the next two years.

None of this is nearly enough. During the first six weeks of the current export year, which began in September, American soybean exports to China are down by about 6 million tons from last year, while soybean exports to the rest of the world are up by only 3 million tons.

MP: Another reminder that Trump’s trade war is an “economic suicide bombing,” as economist Steve Horwitz describes it.

Backfire economics: With soybeans piling up, farmers hope Trump’s trade war ends before their beans rot
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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