President Donald Trump today announced the U.S. will hit China with $50 billion worth of tariffs on more than 1,000 Chinese products, taking the U.S. closer to a trade war with the Asian nation, which has threatened to hit back with tariffs on U.S. soybeans, wheat, corn and other commodities.
With the tariffs, the U.S. aims to punish China for its continued efforts to appropriate U.S. intellectual property as it moves towards the goal of technological self-sufficiency by 2025.
“The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices,” Trump said in a statement.
Several hours after Trump's announcement the Chinese government announced it's intent to hit back with $34 billion of tariffs on "agricultural products, vehicles and aquatic products," according to the government-run Xinhua News agency. Those tariffs will be put in place on July 6 and an additional $16 billion worth of tariffs will be levied at a later date.
House Ways and Means Chairman Kevin Brady, R-Texas, said he agrees with the need to combat China’s intellectual property theft and forced technology transfer, but is worried about the ramifications.
“My message has been consistent: We need to hit our target, which is China and its deceptive and harmful trading practices. But I am concerned that these new tariffs will instead hurt American manufacturers, farmers, workers, and consumers.”
The reaction was swift from farm sector representatives.
“For American farmers this isn’t theoretical anymore, it’s downright scary,” said Brian Kuehl, executive director of the umbrella group Farmers for Free Trade. “It’s no longer a negotiating tactic, it’s a tax on their livelihoods. Within days, soybean, corn, wheat and other American farmers are likely to be hit with retaliatory tariff of up to 25 percent on exports that keep their operations afloat. When they do, they’re not going to remain silent.”
The American Soybean Association has already been speaking up, warning against the new tariffs and a trade war with China.
“A recent study by Purdue University economists predicts that soybean exports to China could drop by a whopping 65 percent if China imposes a 25 percent tariff on U.S. soybeans,” Davie Stephens, ASA vice president, said Thursday. “As a soy grower, I depend on trade with China – China imports roughly 60 percent of total U.S. soybean exports, representing nearly one in three rows of harvested soybeans.”
A study by Ohio State researchers paints an even dimmer picture of the effects on farmers in the Buckeye State. They found that if China imposes a 25 percent tariff on U.S. soybeans and corn, an Ohio farmer’s annual net income could drop by 59 percent.
Chinese government officials have repeatedly vowed to hit back with retaliatory tariffs and the U.S. again today promised it would retaliate against the retaliation, pushing both countries further into a trade war that is already claiming farmers as some of its first casualties.
“The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China,” Trump said.
China is already imposing tariffs on U.S. pork, almonds, oranges, wine and other commodities in retaliation to U.S. tariffs on steel and aluminum.
(Updated at 5:40 p.m. with addition on Chinese retaliation.)