Presidents Trump and Xi: Make Progress on Trade While Meeting for G20 Summit in Argentina11/27/2018 | Soybean Exports, Policy, Soybean News, Economics
Statement from Lindsay Greiner, Keota, Iowa farmer and president, Iowa Soybean Association
As President Donald Trump and People’s Republic of China President Xi Jinping prepare to meet this week at the G20 Summit in Argentina, I urge them to make the most of the opportunity. This starts with fully understanding and appreciating the real and personal impact of a prolonged trade war on the people you represent.
Trade wars involving food are a lose-lose proposition. The ongoing dispute between the two governments has turned global trade upside down and artificially distorted market signals, negatively impacting individuals, families and communities.
China’s economy, which was showing signs of fatigue before the trade dispute, will be further impacted. Long Yongtu, a former minister in the country’s foreign trade department, recently told The South China Morning Post that China’s approach to the trade dispute was “misguided.” He said government officials are not thinking “deeply enough” about the short- and long-term consequences of placing tariffs on ag products like U.S. soybeans, adding that such a move “should be the last resort.”
Here at home, net farm income was down nearly 50 percent from 2013, even before China imposed tariffs on U.S. soybeans. Now, large global supplies combined with a sharp reduction in U.S. exports to the world’s leading soybean buyer are adding downward pressure on prices. This negatively impacts farmers and businesses and their employees who depend on ag production and commerce.
Global markets and currencies are also rattled by the deepening trade war. This will continue in the absence of progress toward a resolution.
For those living and working in China, a reduction in available and reliable suppliers of commodities risks limited availability and higher food prices moving forward. This will only be exacerbated by untimely hiccups in weather or bottlenecks in transportation and logistics.
Artificial market distortions hold additional repercussions. The Independent (UK) reports that deforestation in Brazil, a prolific soybean producer whose exports to China have jumped dramatically this year, has risen to its highest level in a decade. Almost 8,000 square kilometers of the Amazon rainforest was felled this year, an increase of almost 14 percent from a year-ago. The states of Para and Mato Grosso are reported to have experienced the greatest increase in deforestation. Not coincidently, Mato Grosso is Brazil’s most prolific soybean producing region.
A trade stalemate is bad strategy and ineffective for the people of both countries. The world needs its two largest economies doing business. I encourage both leaders to identify solutions and announce a path forward securing long-term trade that’s fair, equitable and reciprocal.
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