After China unveiled steep retaliatory tariffs on American exports on Wednesday, Treasury Secretary Scott Bessent issued a pointy and considerably stunning response: “So what?”
The query underscored the Trump administration’s argument that America has the higher hand in a commerce struggle with China given how reliant its financial system is on exports to the US.
America buys much more items from China than China buys from the US. However Beijing’s choice to retaliate in opposition to President Trump’s punishing tariffs by elevating levies on American imports to 84 p.c may sting greater than Mr. Bessent let on.
“American firms which have been promoting to China, and have been enormously profitable doing that, usually are not going to have the ability to do this due to Chinese language retaliation,” Sean Stein, the president of the U.S.-China Enterprise Council, stated within the hours earlier than Mr. Trump ratcheted up his tariffs once more.
“Tariffs on the Chinese language facet and the U.S. facet cowl every part,” Mr. Stein added, that means every part from aviation to medical imaging to agriculture can be affected and “commerce goes to sluggish,” he stated.
America exported $143.5 billion of products to China final 12 months and imported $438.9 billion from that nation, according to the Office of the United States Trade Representative.
The lack of China as an export market will deal a very onerous financial blow to agricultural staff in lots of purple states, hitting lots of the voters who helped Mr. Trump win the presidential election. On Wednesday, Mr. Trump ratcheted U.S. tariffs on China even increased as he initiated a pause on “reciprocal” tariffs that he had imposed on different international locations. The reprieve gives little aid for farmers who’re involved {that a} protracted commerce struggle with China will lower off ties with their largest export market.
The primary commerce struggle with China, which lasted from 2018 to 2019, resulted in billions of {dollars} of misplaced income for American farmers. To assist offset the losses, Mr. Trump handed out $23 billion in subsidies from a fund that the Department of Agriculture created to stabilize the farm sector. Massive farm operations and farmers within the South benefited the most, fueling considerations about equity and leaving some farmers feeling cheated.
The soybean business is among the sectors most involved concerning the present tariff retaliation. China is America’s largest soybean export market, however when Mr. Trump imposed tariffs on Chinese language items throughout his first time period, Beijing retaliated by shopping for soybeans from different international locations, together with Brazil.
“If this lasts long run, we’re going to have a major variety of farmers going out of enterprise,” stated Caleb Ragland, a Kentucky farmer who’s president of the American Soybean Affiliation. “We nonetheless bear scars from the final commerce struggle.”
The American Soybean Affiliation has been urging the Trump administration to strike a brand new commerce take care of China to keep away from a long-term commerce struggle.
U.S. corn farmers, who promote about 2 p.c of their merchandise to China, have additionally been on edge concerning the commerce combat. They welcomed Mr. Trump’s choice to pause punishing tariffs on different international locations that might have led to extra retaliation on farmers and different American companies. However they urged the Trump administration to give attention to negotiations that open up market entry.
“The longer that uncertainty exists, the extra involved we change into that our growers may harvest billions of bushels of corn for which they won’t have dependable markets,” stated Kenneth Hartman Jr., president of the Nationwide Corn Growers Affiliation. “Our farmers need certainty that our prospects at dwelling and overseas will purchase our merchandise within the months and years forward.”
Nervousness over the affect of the tariffs was evident on Wednesday as Jamieson Greer, the U.S. commerce consultant, testified earlier than the Home Methods and Means Committee and confronted questions from Republicans who have been nervous about retaliation from different international locations in opposition to U.S. farm exports.
Consultant Darin LaHood, a Republican from Illinois, stated that he appreciated what Mr. Trump was doing to deal with longstanding commerce obstacles, however that his constituents have been involved.
“As I speak to my farmers, there’s a whole lot of anxiousness, a whole lot of stress, a whole lot of uncertainty, as a result of once we get right into a commerce struggle, normally the primary pawn within the commerce struggle is agriculture,” he stated.
Mr. Greer responded that “nearly all international locations have introduced that they’re not going to retaliate” apart from China. Indonesia, India and lots of different international locations “have affirmatively stated we’re not retaliating,” he added, whereas some international locations, like Vietnam, have unilaterally provided to decrease tariffs on U.S. farm merchandise. Mr. Greer didn’t point out that Europe introduced retaliatory measures on Wednesday or that Canada had retaliated in opposition to earlier rounds of tariffs.
Mr. Bessent downplayed the affect of China’s response on Wednesday morning, arguing on the Fox Enterprise Community that the US exports comparatively little to China.
“China can increase their tariffs, however so what?” stated Mr. Bessent, who owns as a lot as $25 million of North Dakota farmland that he should divest.
The retaliation may power the Trump administration to revive the bailouts to American farmers that have been provided through the president’s first time period.
Brooke Rollins, the agriculture secretary, stated on Wednesday that such a aid bundle was being thought-about and that “every part is on the desk.”
At a White Home cupboard assembly on Thursday, Ms. Rollins famous that farmers and ranchers had been struggling due to inflation and have been involved about uncertainty over commerce however that they supported Mr. Trump’s financial agenda.
“Your concept of utilizing tariffs to make sure that we’re placing ahead and placing America first, nobody understands that higher than our farmers and our ranchers,” Ms. Rollins stated. “The interval of uncertainty that we’re in, they know that your imaginative and prescient will transfer us into an age of prosperity.”
Mr. Trump provided little readability on Thursday a couple of truce with China, however the president expressed common optimism concerning the financial relationship.
Requested concerning the potential for a take care of China, Mr. Trump stated he anticipated that “we’ll find yourself understanding one thing that’s excellent for each international locations.”
The president initially hailed the commerce deal that he reached with China throughout his first time period as a hit, however China in the end did not honor guarantees it had made to purchase massive portions of American farm merchandise. In the meantime, nearly all the tariff proceeds the US collected throughout that commerce struggle have been used to offer aid to the agriculture business.
Farmers usually resist authorities handouts, however Mr. Ragland of the American Soybean Affiliation stated federal aid may be vital on this case.
“If we proceed for use as a negotiating device, and we’re going to be a sacrificial lamb on behalf of the larger image, we’re going to need to have an financial bundle to assist us maintain the lights on,” he stated.
Tony Romm contributed reporting
