Reality showed up in the grain futures market on Friday, after a week of political gyrations that sometimes move the overnight trade 20 to 30 cents.
The market seems to realize that losses from tariffs will be long-term and only if both sides follow through on their threats rather than negotiating.
Economists on pork and soybeans lay out their numbers, with either taking the market down slightly or hurting both sides equally.
The Trump Administration threatened to impose tariffs against China this past week, and United States Secretary of Agriculture Sonny Perdue on Friday assured farmers they would not be hurt
In a widely distributed opinion editorial, Secretary Perdue said: “[President] Trump is committed to ensuring our economy grows and thrives. That is why he led the fight to pass historic tax cuts and reforms back in December, which are already benefiting the agriculture community. When it comes to trading goods and products with our partners and allies, this Administration is committed to sending the bounty of American harvest around the globe.”
“The reality of tit-for-tat economic sanctions are overrated,” says Purdue University economist Wally Tyner China currently purchases roughly two-percent of the United States’ pork output.
“China produces about 16% of it’s soybeans, it imports the rest,” Tyner said. “The price of all of their soybean imports would go up because of the tariff. The tariff would have a very serious, adverse impact on the Chinese economy, as well as the U.S. economy. Our guess is they’re about equal.”
Purdue University’s Chris Hurt says cutting sales will hurt, but not much.
“The reality is, the Chinese tariffs would lower the price of pork in the United States,” Hurt said. “That’s going to help us sell more domestically. When Canada and Europe ship more to China, we’ll pick up some of their export business.”
It appears President Trump will have to advancing his Chinese agenda often or the market will dismiss it all together.