The trade war between the United States and China has ended up costing billions of dollars for both sides during 2018, with agriculture feeling the most pain.
Reuters, citing Purdue University agriculture economist Wally Tyner, reported that disrupted trade for the agricultural industry hurt both sides because China is the biggest soybean importer in the world, with $12 billion worth of oilseed coming from the U.S. last year. Faced with the trade war, China has been purchasing soy from Brazil, resulting in a record in Brazilian soy premiums. It was an example of how the trade war is hurting sales for U.S. exporters and increasing cost for importers in China, noted the report. “It’s something that’s crying for a resolution,” Tyner said in the Reuters report. “It’s a lose-lose for both the United States and China.” Citing the U.S. Department of Agriculture, Reuters reported total U.S. agriculture export shipments to China fell 42 percent in the first ten months of the year to around $8.3 billion. What’s more, Reuters noted that as of Dec. 28, futures in December were on average at $8.95-1/2 a bushel, down from $9.61-3/4 for all of December 2017. To help suffering farmers, the report noted the government has allocated $11 billion in direct payments and via purchasing goods for government food programs, Tyner told Reuters. He said the move was made after talking to economists.
It’s not just the agriculture industry that is suffering from the trade war, noted Reuters. It pointed to a study commissioned by the Consumer Technology Association, which found the tariffs on imported Chinese products resulted in an additional $1 billion per month in costs for the technology industry. The trade war also harmed the U.S. retail, manufacturing and construction markets, with increased costs for goods. “Input price pressures remained elevated in part due to tariffs, particularly in manufacturing and construction, and firms were struggling to pass these higher costs onto customers,” the Dallas Federal Reserve said, according to Reuters.