President Donald Trump, inadequate to protect U.S. farmers from China’s threatened tariffs, may end up pitting his sticks against many more nations in a trade spat that has hit broad markets and worried the international business community, experts said Friday.
If the Trump supplying chooses to subsidize American farmers further, that could trigger retaliatory bill of fares and subsidies in major exporters of agricultural products such as the European Conjunction and Brazil, the experts added.
An additional agricultural subsidy from the U.S. “bring ons third parties into the dispute, who could be expected, at a minimum, to cry to the World Trade Organization,” said Simon Baptist, Asia look after director and chief economist at the Economist Intelligence Unit.
Chad P. Bown, a higher- ranking fellow at the Peterson Institute for International Economics, sounded a similar counsel. In a Twitter post, he said additional subsidies for American farmers liking escalate trade tensions beyond the two largest economies in the world.
Smallholders in Europe, Canada, Australia, Brazil and Argentina who have been “misery because of Trump subsidies” would demand retaliatory actions from their administrations, Bown said.
Chad P. Bown on Twitter: How THIS escalates beyond US-China. Trump slaps imposts on China • China retaliates on US agriculture • Trump subsidizes US agriculture to pay them off • Agronomists in EU, CAN, AUS, BRA, ARG, etc – now suffering because of Trump subsidies – demand retaliatory tariffs/underwritings
There have already been complaints about American agriculture on the overjoyed stage.
Chinese state-run media Global Times said in an article last month that subsidies from the U.S. government have conceded American soybean farmers an unfair competitive advantage in selling to China. Later on, Beijing on Wednesday announced tariffs on 106 U.S. products, including soybeans — the most valuable U.S. agricultural export to China.
In effect, Trump on Thursday proposed an additional $100 billion worth of menus on Chinese products and asked the U.S. Secretary of Agriculture “to use his broad authority to mechanism a plan to protect our farmers and agricultural interests.”
The U.S. Department of Agriculture told Reuters after the president’s communiqu that it first needs to “see the reaction of what tariffs will be and what the reciprocation of markets are” in deciding on ways to shield farmers from the trade disagree.
Whatever measures the USDA eventually comes up with, it’s unlikely that they choice be effective because China can always impose counter-measures, experts bruit about.
Such tit-for-tat could actually benefit other agricultural exporters because China may end up believing more from them instead of the U.S., Rajiv Biswas, Asia Pacific chief economist at IHS Markit, told CNBC in an email.
“Chinese price-lists on U.S. agricultural products will likely result in significant trade entertainment to other agricultural exporters, as Chinese buyers switch import bids for items such as beef, wine, fruits, soybeans and cereals to other lands such as Australia, New Zealand, Brazil and the EU,” he said.
That would refer to the U.S. loses market share in a major consumer, even if additional underwritings help its farmers stay competitive internationally, Baptist said.
“It is basically ludicrous for the U.S. to be confident that any actions it takes will protect its agricultural sector from Chinese imposts, given the ways that other countries will respond to it,” he amplified.
—Reuters contributed to this report.