Whether trade tensions between the U.S. and various other countries are a true “trade war” are not depends who you are, according to CirrusWealth President Joe Heider.
“It depends on what industry you’re in,” Heider said on Midday Movers (video above). “If you’re a soybean farmer in Iowa, it’s a war.”
Since Trump announced tariffs on China and Beijing retaliated by placing a 25% tariff on American soybeans in April, soybean farmers have taken a huge hit.
Corn and soybean farmer Blake Hurst previously told Yahoo Finance that while farmers are grateful of what Trump is trying to accomplish, “obviously we’d be much better off with a resumption of normal trading patterns around the world.”
According to the New York Times, soybean farmers sold one-third of all of their harvest to China in 2017, making China the No. 1 consumer of American soybeans.
With China refusing to buy their goods, soybean farmers are finding themselves overstocked with their crops because of no one to sell them to. Some are even calling these “refugee soybeans” because it doesn’t have a home anymore.
Due to the trade tensions, farmers in the Iowa region, where soybeans and corn are the biggest crops, are poised to drop 13% in average net cash income. China is turning to Brazil for soybeans instead. Soybean exports from Brazil to China jumped 22% from January to September, which was the total for all of last year. As a bonus, the South American country is earning $2.83 more a bushel than the US.
To help offset the effects of the Chinese tariffs, the Trump administration announced a “three-pronged approach,” consisting of up to $12 billion in aid for the agricultural industry. The first installment was distributed on Sept. 4. Soybean farmers were given the most in aid at $3.7 billion, followed by pork producers and cotton farmers. The second round is expected to be handed out in December 2018, although details remain scarce.
“If this escalates into a full trade war, that will be a problem,” Heider said about the more general situation.
Adriana is an editor for Yahoo Finance. Follow her on Twitter.