Iowa leaders are voicing concern about a trade war after President Donald Trump recently upped the ante with China. It’s a far cry from the sentiment in late May when ag markets received a jolt of optimism as the U.S. and China appeared ready to sign a trade truce.

China at that time promised to significantly boost its imports of U.S. ag products. But by mid-June, Chinese officials said that pledge is no longer in place because of the recent round of U.S. tariffs being imposed on Chinese products.

America’s soybean growers are now lined up even more precisely in the crosshairs of Trump’s contentious tariff confrontation with China. The administration’s recent announcement of additional tariffs on $200 billion of Chinese goods means more damage to producers of soybeans, America’s leading ag export product.

More Chinese goods to be hit with tariff
In the latest round of the tariff feud, Trump announced June 19 that $200 billion of additional Chinese goods will be hit with a 10% tariff, deepening the likely freefall in prices that producers of soybeans and soy products are feeling directly in their wallets and which threaten the stability of their market long term. Deadline for these new U.S. tariffs on Chinese products is set to go into effect July 6.

“We know what happens when tariffs are increased. There’s retaliation, and it hurts agriculture. This is going to hurt Iowa tremendously,” says U.S. Sen. Charles Grassley, after the president’s announcement. Grassley, a Republican and a farmer, said farmers will likely have to absorb the pain from the trade dispute. But that doesn’t mean he’s happy with escalating tariffs. “Don’t interpret that to mean I’m satisfied with this process,” he said. “I’m expressing the political reality of the situation, with a president who is determined to move ahead.”

Farmers want access to markets
Iowa Gov. Kim Reynolds says the tariffs “threaten a fragile ag economy.” She adds, “Agriculture is always the first casualty when we’re talking about trade negotiations. Our farmers are producers, and they just want access to markets.” Reynold says she will again reach out to the White House and Cabinet members with her concerns.

Iowa Republican U.S. Sen. Joni Ernst says, “Tariffs are nothing more than a tax on Iowa farm families. With China vowing to retaliate, farmers, ranchers and rural communities stand to lose the most. And, while I recognize and support President Trump’s desire to hold China accountable, this should not be done at the expense of rural America.”

Bean price taking it on the chin
“Soybean prices are declining as a direct result of this trade feud,” notes John Heisdorffer, an Iowa soybean grower and president of the American Soybean Association. “Prices are down almost a dollar and a half per bushel since the end of May, and they continue to plummet. That represents a loss of more than $6 billion on the 2018 soybean crop in less than a month. We have approached the Trump administration repeatedly and implored them to hear our side of this story.”

He says ASA is disappointed and highly concerned that trade tensions continue to ratchet up rather than de-escalate between the two countries. Soybean growers are also concerned that ASA’s repeated requests to the Trump administration for a non-tariff solution that does not threaten the market stability and livelihoods of soy growers has not been put forward.

Tensions rise between China, U.S.
On June 15, China responded in kind to the United States’ 25% tariffs on $50 billion of Chinese products under Section 301 of the Trade Act of 1974, with its own 25% tariffs on $50 billion of American goods, including soybeans. On June 19, Trump upped the ante with China, threatening to slap tariffs on an additional $200 billion worth of products.

In 2017, China imported 60% of total U.S. soybean exports, representing nearly 1 in 3 rows of soybeans harvested in the U.S., with a value of $14 billion.

Iowa Soybean Association President Bill Shipley of Nodaway released the following statement: “The use of food as a weapon in trade disputes is of grave concern to Iowa and U.S. farmers. It threatens the security and stability of the people and economies of China and the United States, including millions of U.S. farm families.”

Trade war threatens both countries
“There are no winners in a trade war,” Shipley says. “And a trade war that includes soybeans will not start or end well. Soybean prices in the U.S. have already plummeted by about $1 per bushel since the beginning of June. Prices will likely drop further should the tariffs be imposed. This will further pressure agricultural families and businesses already struggling with below-breakeven commodity prices. Duties on imported soybeans will also negatively impact China’s soy processors, animal and aquaculture producers, and its people.

“An ongoing trade dispute with China risks stoking anti-Americanism sentiment that could jeopardize the strength of trade relations between the two countries that have taken U.S. soybean farmers nearly 35 years to develop.

“Iowa soybean farmers recognize the legitimate trade issues involving China and the U.S. We’re also keenly aware of the trade imbalance that exists between the two countries. China consumes nearly 62% of all soybeans traded globally. Approximately 33% of total U.S. soybean production is destined for China, fulfilling almost 40% of China’s total soybean imports. Ironically, U.S. soybeans and agriculture can help improve the trade imbalance by increasing sales to China. This is a much better course of action than suspending sales.

“Farmers are resilient, resourceful and used to dealing with situations out of their control,” Shipley says. “The best way to counteract negative financial impacts of tariffs is to go on offense. The Iowa Soybean Association will continue to work with partners to build demand both here and abroad, find more efficient ways to export our product, and ensure policies and regulations that are fair and workable for farmers.”