Wednesday, April 4, 2018

Heads up Colorado: Tradewars with China hurt Trumpland the most

A version of this was published in the Sky Hi News April 11, 2018

Update May 2018: China has not waited for tariffs to rise; they just stopped buying US soy beans. China is the largest market for US soy beans...not any more.
  • China canceled a net 62,690 metric tons of U.S. soybean purchases in the two weeks ended April 19, the Bloomberg article pointed out, citing USDA data for the current marketing year.
  • The country is the second largest market for U.S. agricultural exports, and soybeans have historically have been one of the top products sold to the Asian giant, according to the U.S. Department of Agriculture Foreign Agricultural Service."

Northeastern Colorado is like Nebraska,  from Ft. Morgan through Hillrose (my father’s birthplace) past Sterling  to the Nebraska line. The last crop my grandfather raised was soybeans.  In fact, Colorado State University has recently promoted more soybean planting because of its potential as a biofuel.  Beef in Colorado is a $3.7 billion per year industry. I live in Colorado’s cattle and hay raising country. China had just lifted bans on US beef imports, but now they have just raised tariffs on  US beef as well.

A couple of weeks ago family members and I took a 2400 mile  round trip drive from Denver to Iowa’s southeastern border with the Mississippi , mostly following !-76 and I 80, for a memorial service for a family member. It had been over twenty years since I had traveled across far northeastern Colorado, Nebraska, and Iowa, the roots of both sides of my parents’ and my  grandparents’ families. When I last made that trek I remember passing one corn field after another. This year for every two cornfields I saw was one field planted in soybeans. Towering above the landscape were new looking ethanol processing plants. Farm houses looked well maintained and the heartland looked prosperous. However,  Donald Trump’s trade policy has just resulted in China retaliating by raising tariffs on US imports from our agricultural heartland.

The Chinese are no dumb bunnies.  China is also the largest market for US soybean exports.They know GOP political leaders in Congress come from soybean, corn and hog land and they targeted their trade retaliation to hurt them the most. Several  Colorado GOP members of Congress represent agricultural producing districts, as well. When President Trump announced his war on China’s steel imports to make good on a promise to the rust belt, I wondered if China would retaliate against the agriculture sector .They did.
The Chinese announced  their retaliation and raised their tariffs on soybeans, beef, and pork.   I recall listening to the radio in my early years in traveling across the heartland that livestock and grain prices and their  future markets were reported early in the morning which would determine what farmers would plant or what and when take to market.    The agricultural futures market and the DOW crashed because of the Chinese retaliation to Donald Trump’s trade policies. The DOW recovered some when China seemed to back down on threats to raise tariffs on the import of US cars, but so far that would help the rust belt but does nothing for the heartland. At this time the tariff raising wars are at the threat stage but it looks like agriculture will still be left in the dust.

But wait, you say, those farmers can still make money on raising corn and soybeans for biofuels. Do not count on the Trump administration itself to care about soybean farmers’ biofuel agriculture. Last week Scott Pruitt,  who heads the Environmental Protection Agency, announced a roll back of clean car engine standards.The auto industry that has relied on biofuel mixed with gasoline to reduce emissions. Pruitt is the administration's’ chief fossil fuel supporter . He hails from Oklahoma and is beset by scandal for his closeness to oil lobbyists.  Ron Zinke, secretary of the Interior, a former congressman with campaigns funded heavily by the fossil fuel industry , is the same who opened up much of Utah’s Bears Ears for oil and gas exploitation. The fossil fuel industry has always resented biofuels that cut into their sales of oil and gas.

 One of the pillars of Trump’s support is a thriving economy, but this could be weakened  in both the heartland and by rising food prices to consumers everywhere thanks to the trade wars just launched by the President. As this is being written, Trump is ignoring howls from the heartland and threatening China with even more tariffs.

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