Denver - Conservative American economists told Xinhua three years ago that the trade war started by former US President Donald Trump would not work. They were right.
“At the time, it was obvious that the Trump trade war strategy of unilaterally imposing tariffs on imports from China and other countries would blow up in that administration's face,“ said Vincent Smith, a highly regarded conservative agro-economist at the University of Montana.
Smith, renowned in his field and a non-resident senior fellow at the American Enterprise Institute in Washington DC, told Xinhua Friday that true to most economic predictions, the Trump trade war with China was an economic disaster.
Trump's approach toward correcting the trade imbalance between the United States and China was “another of several major economic follies pursued by the Trump Administration because of woeful and inexcusable ignorance about how the real world works on the part of the then president and some of his key advisors.”
Data supports Smith's words.
"While the US tariffs were intended to protect American industries, they have largely hurt the US economy,“ a recent report from the non-partisan Tax Foundation said. ”And they incentivised foreign countries to retaliate with their own tariffs, which have damaged the economy even more,“ it added.
DAMAGE DONE
In a report released earlier this year, the US Department of Agriculture (USDA) detailed the impact of retaliatory tariffs on farmers, state-by-state, “by estimating the direct export losses associated with the trade conflict.”
"In 2018, the United States imposed Section 232 tariffs on steel and aluminium imports from major trading partners and separately Section 301 tariffs on a broad range of imports from China,“ the January 2022 study recapped.
"In response to these actions, six trading partners — Canada, China, the European Union, India, Mexico, and Turkey — responded with retaliatory tariffs on a range of US exports, including agricultural and food products. The agricultural products targeted for retaliation were valued at 30.4 billion US dollars in 2017, with individual product lines experiencing tariff increases ranging from 2 to 140 percent,“ USDA research showed.
The USDA estimated that between 2018-2019, the “retaliatory tariffs caused a reduction of more than 27 billion US dollars (or annualized losses of 13.2 billion dollars) in US agricultural exports,” and that the largest export losses occurred with diminished exports to China.
USDA data showed that Illinois and Iowa soybean farmers got hammered most with more than 1 billion US dollars in losses each, while Kansas got crushed in sorghum sales with 478 million dollars in losses each year. Runner-up in sorghum losses was the Centennial State of Colorado.
Nine of the top 11 states hit hardest by tariff losses went to Trump in the 2020 presidential election, and the other two (Illinois and Minnesota) that went to US President Joe Biden saw their rural, conservative farmers in red counties hit hard by the tariffs.
US states won by Trump in 2020 — Missouri, Indiana, Nebraska, and North and South Dakota — suffered agricultural losses of more than 500 million dollars, while Texas and Arkansas lost more than 400 million dollars, according to the USDA.
The biggest losers “were largely concentrated in the Midwest with Iowa (1.46 billion dollars in annualized losses), Illinois (1.41 billion dollars in annualized losses), and Kansas (955 million dollars in annualized losses)” leading the field.
“At the commodity level, soy beans accounted for the predominant share of total trade loss, making up nearly 71% (9.4 billion dollars of annualized losses) of the total, followed by sorghum (over 6% or 854 million dollars in annualized losses), and pork (nearly 5% or 646 million dollars in annualized losses).”
The soybean losses hit Illinois and Iowa, the top two soybean producing states in America, the most. Meanwhile, Brazil's farmers were rejoicing as their sales and profits skyrocketed.
“Countervailing tariffs imposed on key US exports (most obviously soy beans) by those countries did the US economy real harm and undercut the long-run credibility of the United States,” Smith added.
Xinhua