What if Trump’s trade gamble with China pays off?

The sheer volume of correspondence High Plains Journal has received in the wake of President Donald Trump’s announcement to levy tariffs against China is staggering. Most of the letters, statements and press releases we’ve seen are from agricultural organizations that fear the impact to farmers from plummeting prices for the commodities they represent.

Only, it hasn’t turned out that way—so far. Prices for most agricultural goods have remained stable, or even increased, in the days since President Trump announced nearly $150 billion in tariffs on Chinese goods.

This trade tiff is far too complex to summarize in this short column. Like many farmers, I thought the president was forsaking his supporters in Middle America to make a point to China. It was a decision that looked sure to backfire.

Yet, I’m not so sure President Trump isn’t on to something.

Take away the posturing between the United States and China, and two things are abundantly clear: America needs China’s manufacturers to fill our homes with a variety of inexpensive goods that Americans love: clothing, appliances, gadgets and whatever else fits on a container.

But China needs America just as much, if not more, to fill its citizens’ pantries with food—everything from soybeans to sorghum-based liquor to pork and beef. China’s farmers cannot feed its people by themselves. They fill much of the country’s quota for corn, but not for soybeans. China’s appetite for soybeans is so massive that the combined harvests from Brazil and the United States are necessary to meet its consumption. 

China does not play fair in the game of world trade. It is a protectionist state, and asks far more of its trade partners than it delivers. China also has a habit of bending the rules in its favor. For example, China’s tariff on U.S. auto exports to China is 10 percent greater than U.S. auto tariffs. Moreover, China is not above stealing technology and secrets to jumpstart its own research and technology. Just last week, a Chinese scientist was sentenced in federal court for stealing proprietary rice technology developed by Kansas-based Ventria BioScience.

Renowned Kansas State University agricultural policy professor Barry Flinchbaugh said not long ago that China is a bully. At some point, a bully must be confronted, or else that bullying behavior will continue. President Trump is taking a stand on a position that could have significant, long-term positive impact for the United States, just as he promised during the presidential campaign. Is it posturing? Or is it negotiation? It’s hard to tell. So too are the long-term ramifications of this tiff.

In the short term, it appears that some of the president’s words may be paying off: China’s president Xi Jinping has admitted that China’s automobile tariffs are too high and will be revised to a more equitable rate.

One concession by China, however, does little to ease the concerns of this nation’s commodity groups, which have devoted time and resources cultivating relationships with China.

President Trump has bet a lot of his Middle America goodwill on this tiff with China. Only time will tell if he wins big or breaks farmers and ranchers in the wager.

Bill Spiegel can be reached at 785-587-7796 or [email protected].