For certain segments of Missouri’s agricultural economy, trade talks this week between the U.S. and China loom especially large.
In the months leading up to Thursday and Friday’s negotiations in Beijing, the two countries engaged in an escalating series of trade maneuvers, with many tariffs threatened and some already imposed.
After President Donald Trump proclaimed tariffs on aluminum and steel in early March, China responded with $3 billion of its own tariffs on 128 U.S. products. Since then, the two sides have floated threats of more than $200 billion worth of tariffs.
Because many of China’s tariffs take aim at American agriculture, the industry has been keeping a close eye on every change.
But how much might the trade tensions affect the types of agriculture most important to Missouri? Here’s a look at how tariffs that have been threatened or enacted could affect some of Missouri’s top agricultural commodities.
Soybeans, Missouri’s top agricultural commodity, accounted for almost $2.1 billion in farm receipts in 2016, according to the Missouri Department of Agriculture.
China has proposed a 25 percent tariff on U.S. soybeans.
Tony Clayton, president Clayton Agri-Marketing, a Jefferson city company that markets livestock genetics and agricultural products overseas, said trade tensions with China have stoked concerns about a valuable market drying up.
“People are worried about the effect it might have on the soybean market,” Clayton said, “because that is the U.S. best market for soybeans.”
In a statement issued earlier this year, C. Brooks Hurst, president of the Missouri Soybean Association, urged Trump to consider the importance of soybeans and agriculture.
“Farmers have invested significantly in developing their international markets for soybean, including China, and should not bear the brunt of discord on China’s policies on intellectual property and information technology,” the statement reads.
Because of its dependence on the crop, Missouri values any trade opportunity with China, the largest buyer of the U.S. soybeans.
“There are more acres of soybeans earth than corn and rice together,” said Patrick Westhoff, a professor of agricultural economics and director of the Food and Agricultural Policy Research Institute at the University of Missouri.
“So what happens in that particular market is absolutely essential to Missouri agriculture.”
This isn’t the first time U.S. soybean exporters have experienced barriers to trade with China. Last year, China announced stricter quality rules on imports of U.S. soybeans. The new standards, enacted in January, raised costs of soybean exports and further affected sales.
The soybean trade with China had been doing well, Erin Ennis said before the recent escalation of tensions. “But at the same time, there’s also a challenge of meeting those very high standards of the product, and there are some tensions in the U.S.-China relationship that I know industry has concerns could impact purchases of U.S. agriculture products,” said Ennis, senior vice president of the U.S.-China Business Council.
Still, even before the proposed tariff, American exporters were feeling the effects of competition from other countries.
“This (lower soybean prices) is primarily because of competition from other countries and global soybean markets,” Westhoff said. “Brazil, in particular, Argentina as well, have increased exports of soybeans and soybean products.”
China imported 3.1 million tons of U.S. soybeans in March, 27 percent lower than the same period last year, according to China Customs Statistics. Meanwhile, China’s soybean imports from Brazil have increased one third to the same period a year ago.
Missouri shipped $94 million worth of pork and pork products to China and Hong Kong in 2017, according to U.S. Department of Agriculture data.
Pork and pork products, which are among Missouri’s top exports, were part of China’s first round of tariffs, enacted on April 2.
The tariff affects an export that Westhoff said is of high importance to Missouri producers.
“In the case of pork import … the U.S. is currently exporting roughly $1 billion pork to either China or Hong Kong a year,” Westhoff said. “And much of the exports to Hong Kong will probably end up in the Chinese market as well.”
Spencer Tuma, the director of federal legislative programs at the Missouri Farm Bureau, cautioned that China’s moves on trade with the U.S. could affect other countries’ policies.
“If enacted, these additional tariffs could put pressure on other countries to impose retaliatory tariffs on United States agricultural goods,” Tuma said.
For many in Missouri’s agriculture sector, further escalation of trade tensions with China and the spread of tariffs to other countries are unwelcome prospects.
In March, after China announced $3 billion in tariffs, Clayton considered a possibility he feared would do damage to Missouri’s agriculture industry.
“We hope we don’t get caught up in some sort of a trade war between the politicians,” he said.