Even as China and the U. S. push toward a trade deal, the long-term trends in global trade are still against American producers.
There may be new winners as President Donald Trump ramps up trade pressures on China: America’s top competitors.
Brazil could bring millions of new acres of land into production faster with the help of Chinese investments in its roads and railways, a boom for soybean farmers seeking an edge over U. S. farmers. In Europe, Airbus is poised to ramp up production to fill Chinese orders that were originally meant to go to U. S.-based Boeing. Australia, Canada and other countries may be able to export the scrap aluminum and other recyclables the U. S. used to send to China en masse.
Even as China and the U. S. push toward a trade deal, the long-term trends in global trade are still against American producers when it comes to China’s consumption. And while the U. S. could drop some of its tariff threats against Beijing, others are likely to remain: Treasury Secretary Steven Mnuchin on Tuesday said U. S. penalties on imports of steel and aluminum would stay in place.
“I advise clients, prepare for the worst, hope for the best, but do not assume we are going back to a status quo situation where everything is going to be OK again,” said William Cohen, a former Defense secretary who now leads a business advisory firm.
“China has changed the gravitational pull in the universe,” he added.
Beijing will continue to pour resources into other countries to diversify its sources for everything from food to consumer goods to meet growing demand. And that worries American manufacturers and growers who stand to lose market share to competitors whose governments are friendlier to global trade.
The driving force behind these trends is China’s emerging middle class. The country’s economic development and desire to become an innovative powerhouse is rapidly transforming China’s export-driven economy into a consumer-based market. That makes it a sought-after destination for everything from financial services to farm products.
Brazil’s push on soybeans is a prime example of the unintended — and irreversible — consequences of a U. S.-China trade war. The U. S. once was the major grower and exporter of soybeans, with China as the major consumer and importer. Now, the South American nation has supplanted the U. S. as the biggest global supplier. Protracted discussions between the U. S. and China are just expected to exacerbate the widening gap.
That would be especially true if Beijing goes through with a threatened 25 percent tariff on U. S. soybeans in retaliation to a list of proposed U. S. tariffs. The penalties now seem to be on hold, but could be imposed if the two countries don’t reach a deal.
The Agriculture Department is already projecting that Brazil will increase its soybean production by about 9.5 million hectares over the next 10 years.
