As a threatened trade war with China took its first potent steps Friday, Iowa farmers worried the conflict would close off markets and hurt their bottom line and economists fretted over the impact on the state economy.
The Trump administration levied 25 percent duties on $34 billion worth of Chinese goods. Shortly after, China responded with counter measures targeting — among other things — commodities including the Iowa stalwarts of soybeans and pork.
The news came as a disappointment to some at a time when many producers have been expecting higher yields.
It’s “kind of frustrating because now I have to sell a lot more bushels for a lot less money,” said Robb Ewoldt, a farmer from Blue Grass.
Prices for soybeans already have dropped in anticipation of the trade conflict. The average cash price fell to $7.79 per bushel this week, according to a Bloomberg report Friday.
Shortly after the first volleys of tariffs were exchanged, the Iowa Soybean Association issued a statement urging a quick resolution to the conflict with China.
“Time is of the essence,” it said.
Near Eldridge, Jerry Mohr, a longtime farmer who has been heavily involved in trade issues, said he worried a damaged relationship could have a long-term impact.
ARTICLE CONTINUES BELOW ADVERTISEMENT
In the business for 45 years, Mohr is a past president of the Iowa Corn Growers Association, and has gone on trade missions advocating for broader trade.
Mohr said Friday he’d been anticipating the potential for tariffs and already had sold about 40 percent of his soybeans.
“For me, that’s heavy,” he said.
He usually waits to see what summer brings but because the price was above his break-even point, and he knew tariffs were likely, he sold.
Other farmers said they, too, tried to lock in prices early.
“I wish I’d sold more,” Mohr added.
The threat of tariffs could weigh heavily on Iowa’s economy. A study earlier this year said administration tariffs on $50 billion worth of Chinese good and subsequent counter measures by China could cost the state 1,800 jobs and push farm incomes down 6.7 percent. The study was commissioned by the Consumer Technology Association and National Retail Federation.
Lower farm incomes also could affect companies like Deere & Co. In a statement on Friday, Ken Golden, a Deere spokesman, said: “Deere continues to support free and fair trade policies both for the company and for our customers. As we continue to monitor the trade policy decisions closely, we are hopeful for a timely resolution that is beneficial to the global agriculture and manufacturing economy.”
That desire for a quick end was echoed widely.
“Let’s get back to the table, quit digging our heels in the sand and work with each other,” Bill Shipley, a farmer from Adams County in southwest Iowa, urged in an interview Friday. He is president of the Iowa Soybean Association.
President Donald Trump has frequently criticized other countries’ trade policies toward the United States, especially China — which for years has frustrated the technology sector in particular.
Trump already has imposed duties on steel and aluminum, and the administration is in the midst of renegotiating the North American Free Trade Agreement with Mexico and Canada.
The president also threatens more action against China.
ARTICLE CONTINUES BELOW ADVERTISEMENT
Thank you for signing up for our e-newsletter!
You should start receiving the e-newsletters within a couple days.
Some farmers say they understand the administration’s criticism of China’s trade practices.
Dave Walton, a Wilton soybean and corn farmer, expects crops will be priced more aggressively going forward and it will be necessary for China to make a deal with the United States to help close the trade gap.
Though a trade at isn’t what farmers wanted, Walton saw it coming.
“I think this situation shouldn’t have been a surprise to anybody,” Walton said. “President Trump campaigned on this issue and he’s done it, but the speed at which he’s done it has caught a lot of us off guard.”
Ernie Goss, an economist at Creighton University in Omaha, said trade barriers are a legitimate concern, but added in a trade war “all parties get harmed.”
Goss said he’s worried, too, about how long the conflict will last.
“Everybody else thinks the other side is going to blink, and no one has blinked,” he said.
Meredith Ecklund of the Muscatine Journal and Erin Murphy of The Gazette-Lee Des Moines Bureau contributed to this report.