Guest Editorial: Risky times for region's ag producers
The opening round of President Trump's trade tariffs went into effect Friday, and now the country awaits answers to so many questions, including:
1. Will ag producers be as adversely affected as many predict?
2. Will China blink?
3. Can the president's strategy possibly work?
For the record, we do not like any idea that puts American ag producers at risk. A statement released Friday by John Heisdorffer, president of the American Soybean Association, sums up our worries.
"Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports," he said. "The math is simple. You tax soybeans at 25 percent and you have serious damage to U.S. farmers."
This concerns us because North Dakota and Minnesota are among the greatest soybean producing regions in the world. Both produce more than 7 million acres of soybeans annually.
Soybean producers obviously are worried. We don't pretend to completely understand the economics of a typical family farm, so we defer to the experts, and they're aren't optimistic.
Friday, Minnesota Soybean Growers Association President Michael Petefish said soybean prices have dropped nearly 20 percent since the tariffs were first proposed.
"(The tariffs becoming reality) obviously won't help matters and is extremely unwelcoming," Petefish said in a statement released by the MSGA. "With margins already razor-thin, farmers can ill-afford to carry this extra burden in this unsteady economic climate."
China also has added tariffs on corn, pork and poultry. Again, not good for this region.
China could blink, since many analysts believe China needs the U.S. more than we need them. The U.S. imports nearly $500 billion annually from China while the Chinese import between $100 billion and $150 billion from the U.S. The difference means China could be more adversely affected if a prolonged trade war erupts.
Since China has more invested in the export game than does the United States, a trade war could cost more jobs in China than in the U.S. Also, the Reuters news service reported late in the week that talk of tariffs over the past several months has affected China's stock market value and driven down its currency.
Perhaps this is why the president urged North Dakotans, during his recent trip to Fargo, to "just play the game a little while. It's a game we can't lose."
He continued: "They say 'Trump is starting a trade war,' but I say no, the trade war ended a long time ago and the United States lost because our leaders wouldn't take care of our people and our companies. We're not starting a trade war but we'll finish it. In the end, and it's already happening, they will come to us and say 'let's work it out.'"
It's a risky game of poker and, unfortunately, the stakes are high in the Dakotas and Minnesota.
We believe the answer to question No. 1 is easy: Yes — producers will be adversely affected.
Meanwhile, we're crossing our fingers and hoping the president's strategy works and China does indeed blink in the face of its own economic pressures.