TRADE EXPERT: ” UNINTENDED COSTS OF A TRADE WAR ARE FAR MORE SIGNIFICANT THAN MOST AMERICANS REALIZE”
TRADE EXPERT: ” UNINTENDED COSTS OF A TRADE WAR ARE FAR MORE SIGNIFICANT THAN MOST AMERICANS REALIZE” by Mac Slavo for SHTFPlan
Doug Barry, senior director of communications and publications for the U.S.-China Business Council (USBC), told Yahoo Finance that most Americans don’t realize the costs of a trade war are significant. But that’s not the only bad news. Barry also said: “We found that…they’re not easy to win.”
Barry was quoted by Yahoo Finance as saying: “Remember, we were told that the trade wars are easy to win? That was just as they [trade wars] were beginning a year ago. We found that not to be true, they’re not easy to win.” He added: “not only aren’t they easy to win, but the unintended costs of a trade war are far more significant than most Americans ever realized. That’s the wake-up call — when you start engaging in this kind of conflict, there doesn’t seem to be a bottom to it.”
According to the USBC’s 2019 State Export Report, the U.S. saw a 7% decline in goods exported to China between 2017-2018. And 36 states exported fewer goods to China in 2018 than they did in 2017. This is likely tied to the tariffs spurred by the trade war.
Some of those states include Illinois, Iowa, Kentucky, Nebraska, Missouri, and Kansas — an overwhelming majority in the Midwest. Exports from Illinois to China were down 32.9% last year, the largest among any state. Its biggest exports were oilseeds and grains. Overall, Illinois’ exports to China accounted for 57,570 American jobs in 2017, according to the USBC report.
These are states that rely heavily on the agricultural industry, like soybeans. At one point in 2018, U.S. soybean exports to China — the biggest consumer of the product — were down 98%. To try to offset the effect of the tariffs, the USDA created its market facilitation program to dole out payments to farmers. –Yahoo Finance
“The subsidies that the U.S. government is providing to farmers to make up for lost sales to China are not making up dollar for dollar for the loss,” Barry said. “So, I think one point to make clear is that they do not completely make these farmers whole. There’s still a difference between what the farmers could earn and did earn when there weren’t tariffs on their products going into China and what the U.S. government is paying them.”
American farmers have been suffering from a lack of business since the trade war began and China could make sure that those markets are unavailable to U.S. farmers once the trade war is over (if it ever is.) “China is not sitting around waiting for this trade dispute to be resolved,” Barry said. “Those markets for a U.S. farmer could be gone permanently.” He added: “Once the Chinese buyers have developed relationships with other suppliers, why should they come back to the U.S. if they can get what they need at a similar price or a lower price, as is the case now, because the competitors’ prices are lower because they’re not tariffed to the same extent that the U.S. products are tariffed?”
Jobs that depend on a vibrant trade with China will suffer even more in the coming months as the prices of goods continue to go up because this disaster is dragging on. Initially, the tariffs were projected to cost consumers an average of $831 annually. Some families could absorb that while others will have to make choices, but the costs will rise in the next year, and for those living paycheck to paycheck, this is not the best news. The cost to the American consumer is projected to surge to $2,000 per consumer annually for 2020, according to research from the National Foundation for American Policy. Overall, the cost tallies up to a total of $259.2 billion on American taxpayers.
The brunt of this trade war will be felt by those living closer to the poverty line, American farmers, and anyone who’s job depends on free trade.