How could the latest Chinese tariffs impact NC agriculture?


The first strike in the intensifying trade war came just after the clock struck midnight.

The United States is slapping levies on billions of dollars’ worth of Chinese goods and China responded quickly with billions more in tariffs on U.S. products with its commerce ministry saying “necessary counterattacks” are now in place.

 So, what’s going to happen now?

 Most folks want to know what is the impact of a trade war between the world’s two largest economies?

 To start with, a tariff explanation is necessary. Quite simply it’s a tax imposed by one country on the imports or exports of goods from another country.


Tariffs are now in effect on $34 billion worth of Chinese goods coming into this country.

And China retaliated by imposing billions in tariffs on things like soybeans, corn, wheat, rice, pork, poultry and dairy products. The complete list is here.

Right now, Reuters reports, there’s confusion at Chinese docks about whether to ship goods or not to the United States.

The president says the tariffs are necessary to, in his words, correct years of countries like China taking unfair advantage of the United States in trade matters.

How will the latest tariffs impact the North Carolina’s $4 billion agriculture industry?

Because it’s an intertwined system, the impacts aren’t always direct, but there would be a ripple effect here in North Carolina when it comes to agriculture.

For example, a lot of soybeans go to feed North Carolina dairy cows, but, soybeans are also used to help feed hogs and North Carolina is the second largest producer of hogs in the world.

A tariff on swine would affect hog farmers who might not be able to export their hogs. That would then affect soybean farmers whose crops are used to help feed hogs and poultry in the state.

In addition, farmers in North Carolina contract with large conglomerates like Prestige Farms or Smithfield Foods and produce hogs for them and those companies would be impacted by Chinese tariffs on their exports.

The impact on beef sales might not be as severe, initially, because much of North Carolina’s beef is sold domestically.

As for tariffs on grains, the North Carolina Agriculture Department says state farmers bring in more grain than they export.

But, North Carolina’s farmers depend on a world economy and export to Canada, Mexico, China, Saudi Arabia and Japan as well as to the European Union. And several of those countries have imposed retaliatory tariffs in response to the president’s moves.

Now, with China in the fray, economists worry the two countries will continue to add tariffs on more and more goods further exacerbating the situation.

But, some experts believe the president won’t keep imposing tariffs on China.

Speaking on the CBS Morning News, the president of the Eurasia Group said he doesn’t foresee a quick escalation of the tariff wars between the two countries.

“He (Trump) knows that Chinese can hit back really hard in a targeted way against Red States and farmers,” said Ian Bremmer. “So, I would be surprised if we saw a significant escalation as opposed to significant rhetoric before the elections in November, which is what we are really talking about here”

You can watch the whole interview with Bremmer here. 

Recently, Harley Davidson announced it was moving some of its motorcycle production overseas to get around retaliatory tariffs the European Union imposed on U.S. goods. The auto industry is worried about a loss of jobs if the president imposes a 25 percent tax on foreign cars and their parts which could impact jobs.

“Frankly, if we lose one to two million automobile sales, that’s gonna mean a loss of a lot of American jobs. Period,” said Dr. Tim Nash who is an auto industry analyst from Northwood University.

It isn’t only foreign cars that would increase in price, Nash says the cost of American cars would increase too because most are made with foreign parts.

The short-term impact of the all these tariffs will be that consumers pay more for goods.

But, if the trade wars continue, economists say, companies could scale back investment plans, resulting in slower growth for the economy and that could lead to more job losses.

Right now, we’ll have to wait and see who is going to blink first in this economic confrontation.

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