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Trump Attempts to Talk Down Trade War as Farm Belt Anger Rises

Trump says US and China will remain friends and China will take down trade barriers because it's the right thing to do.

Farm belt politicians don't see things the same way: Anger Over Trump Tariffs Puts Republican Candidates in a Bind.

In North Dakota, a major soybean-producing state, Representative Kevin Cramer, a Republican who is running for the Senate, sounded restrained this past week when he urged Mr. Trump to “take a more measured approach” to China. By Friday, he sounded panicked.

“I contacted @SecretarySonny to urge him to use every tool in the Farm Bill, including Commodity Credit Corp programs, to protect ag producers from effects resulting in potential trade actions against China,” he wrote on Twitter, referring to Agriculture Secretary Sonny Perdue.

A trade war with China could be particularly devastating to rural economies, especially for pig farmers and soybean and corn growers. Nearly two-thirds of United States soybean exports go to China.

Iowa’s senators — Joni Ernst and Charles E. Grassley, both Republicans — have called on Mr. Trump to reconsider. In a statement, Ms. Ernst cited the “real danger that increased tariffs on U.S. exports will harm Iowa producers and undermine the rural economy,” and she said she had spoken directly with the president about it.

While some farmers and lawmakers have expressed hope that Mr. Trump’s threats are merely a negotiating tactic, administration officials insisted this past week that was not the case.

“There is the potential of a trade war,” Steven Mnuchin, the Treasury secretary, said in an interview with CNBC. “There is a level of risk that we could get into a trade war.”

“Trump is not just using tariffs as a negotiating card. He said that to me,” Mr. Kudlow told reporters on Friday.

Right Thing To Do

Supposedly, China will do the right thing, just because it's the right thing to do.

By that logic, the US would remove all tariffs and subsidies and China would do the same.

Yeah, right.

Mike "Mish" Shedlock

Hey Carl_R. It sounds like the farmers aren’t as sanguine as you about a possible trade war. Maybe it’s because they are competing with farmers from other countries for market share. No one wants to lose market share. If tariffs are put on US soybeans, and China ends up buying more from Brazil (or elsewhere) then farmers in Brazil will expand their production going forward as they gain a larger share of the Chinese market. Similarly, US farmers will cut production. No matter how much you try to rationalize a trade war, the effects will be negative for both the US and China.

Hey! Have we not been subject to all sorts of Leftist screeching that the US (Always and only the US; let's Hate America First!) has been destroying the top soil and washing pollution into the oceans by growing too much soybeans and corn?

Mind you, I am still waiting for the applause from all the proper Left-thinking people for America's first environmentalist President -- President Trump! Great deal -- cut the trade deficit and save the environment too.

Mish, how are food tariff's against the USA supposed to work? Lets say worldwide Soybean production is 100 units, 50 by the USA and 10 by 5 other countries (say, Canada, Brazil, Australia, Argentina and Russia). Lets also say China buys 50 units a year (25 from USA, 5 from other 5 countries). If they apply high tariffs to the US imports then Chinese companies are just going to buy all 50 units from the other countries at the same price they did before (futures contracts). Meanwhile all that happens is the US sells to all the other countries that China used to buy from so it's a net zero worldwide other than what countries China buys from. The only way it can have any affect is if world production > world consumption so that the US farmers are the ones left out holding excess production. Is this actually the case that there is excess production world wide?

Texas. You’re assuming it is a zero sum game. It is not. The problem, is that Trump thinks like that too. And your country will suffer for it.

I agree with u for the most part. Does anybody on Mish’s blog ever read the WSJ? The Saturday Journal has an article by Holman Jenkins on the editorial page “Trump’s Trade Tactic Might Work. I totally agree with his first point that there is so much hate especially in the news media, they want Trump to fail so they r doing China’s work for them just to start with.

I agree with Kinuachdrach

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OK. All the bs about the ag tariffs and the idiot reps running around like chickens with their heads cutt off is just that, bs. At least in the case of soybeans, the global export matrix is a finely tuned thing. Countries will need to import the same amount of beans regardless of where they come from. If China doesnt import US beans because of tariffs, they will head on down to Brazil or Argentina. Others who would have bought from Brazil or Argentina will come to the US. The beans will still be sold, just maybe to different parties. The net effect is practically nil. Which is why despite a couple sudden drops in prices, beans have held in there. The effect might be more pronounced in Hogs. But in beans the net effect is basically nothing.

It is trust and confidence in govt that is the driver behind interest and exchange rates. Also, tariffs have never reversed the trend. Trade is a small percentage of the $80+ trillion in global investment sloshing around the world in search of a safe return. Besides, since the US is least dependent on trade, we will be hurt less. Ideally, we would have free trade. However, as long as we have politicians that would gladly sacrifice their citizens for another term in office, we must live the real world.

Your BELIEF that closing the gold window is the source of the problem is naïve at best. Do you seriously think govt fraud, corruption, and the lack of equal enforcement of the rule of law would not exist if we were still on a gold standard? Would govt stop creating false flags, lying about their mismanagement, and blaming foreign boogymen to start distractive wars? All of these problems happened when gold or sea shell standards existed.

As with most govt stats, they are very misleading. For example, when surplus nations buy our debt with their proceeds, their funds go through the Capital Account, while the interest payments out of the US go through the Current Account, which makes the trade deficit worse.

Trade is a distraction, just like blaming the Fed. Who changed the Fed’s mandate from buying corporate debt during recessions to buying Federal debt? It’s the same body that redefined “rich” for income taxes, and claimed income taxes would never expand beyond the so-called rich. It’s the same body the excludes themselves from laws they pass, including insider trading. Until we get serious about booting the bums out and demanding short term-limits, rhetoric will carry less weight than govt promises.

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