Truce Aside, US-EU Trade Relations Are In for a Bumpy Ride

Jul 31, 2018, 00:41
Truce Aside, US-EU Trade Relations Are In for a Bumpy Ride

Aaron Putze, the communications director for the Iowa Soybean Association, said the development with the European Union underscores the administration's commitment to making progress on matters of trade, but added, "We remain steadfast in our call for progress to be made to resolve the trade dispute with China".

Sen. Jeanne Shaheen (D., N.H.) said on the same program that 140,000 jobs in her state were at risk if Mr. Trump's tariffs continue.

The central bank was forced to burn almost US$1 trillion worth of foreign exchange reserves to stabilise the situation and it installed a mysterious "counter cycle" factor in setting the yuan value in May a year ago, a move that gave it even greater say over the yuan exchange rate. Others say the last large-scale trade war, started with the Smoot-Hawley Tariff Bill - not only extended the Great Depression it contributed to the events leading up to WWII.

In a bracing statement, the International Monetary Fund warned that a trade war could shave 0.5% off global growth by 2020, amounting to some $430bn in lost economic activity.

The administration's assistance package will be delivered through three pathways: the Market Facilitation Program, which will provide direct payments to farmers and producers of specific agricultural products (soybeans, sorghum, corn, wheat, cotton, dairy, and hogs); a Food Purchase and Distribution Program, which will purchase surplus of "affected" agricultural commodities; and a Trade Promotion Program charged with "developing new export markets for our farm products". The new tariffs are seen as the primary cause.

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Global markets have remained generally calm despite the eruption of a full-blown US-China trade war and the other conflicts Trump has ignited.

In the United States on Wednesday, Mr Trump and Mr Juncker announced their plan to defuse a festering trade row, that in effect saw Washington back off a threat of auto tariffs against Europe, at least for now. Juncker also agreed to buy billions of dollars more in USA soybeans and natural gas. However, it is becoming more and more apparent that is not congruent with being all-in for Mississippi. "I don't know if China will come back to us or not".

The scope of the damage depends on whether the tariffs cease or escalate. Let's hope we don't have to go to penalty kicks. Any attempts to retaliate against USA interests, even following the direct imposition of United States tariffs, are likely to bear a heavy cost.

When manufacturing costs up, manufacturers have to either adjust to the higher cost or find something to replace the imported good.

"On a conference call with reporters Tuesday, administration officials said they expect the infusion of money to be a one-time shot that will not extend into next year", an NBC News analysis reported.

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On July 6, the US tariffs on some $34 billion worth of goods imported from China went into effect. China still has to get soybeans from somewhere, and so far their eyes are set on Brazil.

It's taking place on a congressional electoral map unfavorable to Republicans, in an election season whose outcome will determine Trump's ability to carry through his trade threats beginning in 2019. Farm price supportsadjust to lower average prices over time - pushing producers further below the point of breaking even. In anticipation of the tariffs, the agricultural industry pushed out more exports than usual, which postponed the price effects for months.

But other industries in the surrounding area have experienced negative consequences from Trump's trade policies, which the President declined to mention in his wide-ranging speech on Thursday. "It's because they were doing all this advanced preparation to get around all the harm that would be coming later".

Shortly after the Commerce Department urged Trump in February to consider the tariffs, the weekly price of steel and aluminum increased.

This program may not directly influence grains and oilseeds, though, as the commodities the agency listed were fruits, nuts, rice, legumes, beef, pork, and milk.

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