I guess we should remember the date. The trade war started today:
A trade war between the world’s two largest economies officially began on Friday morning as the Trump administration followed through with its threat to impose tariffs on $34 billion worth of Chinese products, a significant escalation of a fight that could hurt companies and consumers in both the United States and China.
The penalties, which went into effect at 12:01 a.m., prompted quick retaliation by Beijing, which said it immediately put its own similarly sized tariffs on American goods. Previously, the Chinese government had said it would tax pork, soybeans and automobiles, among other products
China’s Ministry of Commerce said in a statement that the United States “has launched the biggest trade war in economic history so far.”
American soybean farmers are among the first victims:
Soybean prices in the U.S. and Brazil, the nations that account for roughly 80 percent of global exports, have taken drastically different paths thanks to Donald Trump’s trade war.
In the U.S., average cash prices fell to about $7.79 a bushel this week, the lowest in almost a decade, according to an index compiled by the Minneapolis Grain Exchange. China’s tariffs on American goods including farm products have now taken effect after the U.S. implemented a raft of duties earlier in the day Friday and President Trump threatened more action.
Meanwhile in Brazil, exporters have been handed high times. Soybeans to be loaded in August at the nation’s Paranagua port fetched $2.21 a bushel more than Chicago futures as of Friday, the widest gap since data starts in 2014.
Not surprising then that the Politico Playbook reports:
Republicans have privately warned us they think that a trade war with China is enough to cost them their majority in the House. The everyday economic impact — higher prices, businesses laying off employees — would blunt any positive impact of tax reform. Well, the trade war is here. Combine that with rising gas prices four months before Election Day.
It remains to be seen if soybean farming districts will punish their (mostly) Republican congresspeople to the point it causes some major upsets in the House. It could have an impact on some Senate races, too. Of course, the retaliatory tariffs are designed to do the most damage to Trump’s base thereby dividing the Republicans and eroding Trump’s position. Europe went after Kentucky bourbon and Harley-Davidson in a clear message to Mitch McConnell and Paul Ryan. China is going after pork and soybeans as well as the automotive industry that is as important these days in Alabama, Tennessee and Indiana as it is in Michigan. In any case, those are all state that voted for Trump.
It’s hard to say how people will react. Will they really treat a trade war like a shooting war and rally around the president and the flag? That might happen. On the other hand, maybe a lot of people will turn on the president and his party when they feel a very direct sting from his policies.
All Trump really has going for him here is that he can argue that he isn’t afraid to stir things up and take other countries on. But he’ll have a hard time keeping his own party on board for a trade war that is hurting their own constituents and causing job losses and plant closures in their districts.