President Trump’s trade war with China escalated this week, as China announced tariff increases on over $60 billion worth of goods in retaliation for new U.S. tariffs. But the targeted American industries are already reeling from the trade skirmishes that heated up last summer.
Over a six-month period ending in March, exports from the United States to China dropped by $18.4 billion, or 26 percent, compared to a year earlier. Some of the decline was offset by other markets, with exports increasing to the European Union and Mexico. Imports from China declined as well.
China
E.U.
Canada
Mexico
Exports
$200B
+10%
0%
+3%
100B
Exports
-26%
0
100B
-2%
+7%
Imports
200B
Imports
+7%
-5%
Before
tariffs
After
tariffs
China
E.U.
Canada
Mexico
Exports
$200B
+10%
0%
+3%
100B
Exports
-26%
0
100B
-2%
+7%
Imports
200B
+7%
Imports
-5%
Before
tariffs
After
tariffs
China
E.U.
Canada
Mexico
Exports
$200B
+10%
0%
100B
+3%
Exports
-26%
0
100B
-2%
+7%
Imports
200B
Imports
+7%
-5%
Before
tariffs
After
tariffs
China
E.U.
Canada
Mexico
$200B
Exports
+10%
0%
+3%
100B
Exports
-26%
0
100B
-2%
+7%
Imports
200B
Imports
+7%
-5%
Before
tariffs
After
tariffs
E.U.
China
Canada
Mexico
Exports
$150B
+10%
0%
+3%
100B
Exports
50B
-26%
0
50B
100B
-2%
+7%
150B
Imports
200B
+7%
Imports
-5%
250B
Before
tariffs
After
tariffs
The decline reflected lost sales by a host of producers, from farmers and fishers to carmakers and oil companies, and in many cases marked an end to years of growing sales. These patterns reflected how China targeted its first round of higher tariffs at producers in manufacturing and farm states that were key supporters of Trump’s 2016 election, including Michigan, Wisconsin, Ohio, Iowa, North Carolina and Texas.
Large industries hit hard by first
wave of Chinese tariffs
Exports to China for Oct. 2017 to Mar. 2018,
prior to tariffs and Oct. 2018 to Mar. 2019,
after tariffs were implemented, for
industries with over $1 billion in exports
that had the greatest declines
Exports to China for Oct. 2017 to Mar. 2018, prior to tariffs and Oct. 2018 to Mar. 2019, after tariffs were implemented, for industries with over $1 billion in exports that had the greatest declines
Before tariffs
After tariffs
Soybeans
$9.1B
Fossil fuels
$6.5B
Vehicles
$5.9B
$4.1B
Wood
$1.7B
$1.8B
$1.4B
Copper
$1.1B
$1.0B
$0.6B
Large industries hit hard by first wave of Chinese tariffs
Exports to China for Oct. 2017 to Mar. 2018, prior to tariffs and Oct. 2018 to Mar. 2019, after tariffs were implemented, for industries with over $1 billion in exports that had the greatest declines
After tariffs
Before tariffs
Soybeans $9.1B
Fossil fuels $6.5B
-80%
Vehicles $5.9B
$4.1B Vehicles
$1.8B Soybeans
Wood $1.7B
$1.4B Fossil fuels
Copper $1.1B
$1.0B Wood
$0.6B Copper
Large industries hit hard by first wave of
Chinese tariffs
Exports to China for Oct. 2017 to Mar. 2018, prior to tariffs and Oct. 2018 to Mar. 2019, after tariffs were implemented, for industries with over $1 billion in exports that had the greatest declines
After tariffs
Before tariffs
Soybeans $9.1B
Fossil fuels $6.5B
-80%
Vehicles $5.9B
$4.1B
$1.8B
Wood $1.7B
$1.4B
Copper $1.1B
$1.0B
$0.6B
Large industries hit hard by
first wave of Chinese tariffs
Exports to China for Oct. 2017 to Mar. 2018,
prior to tariffs and Oct. 2018 to Mar. 2019,
after tariffs were implemented, for
industries with over $1 billion in exports
that had the greatest declines
Before tariffs
After tariffs
Soybeans
$9.1B
Fossil
fuels
$6.5B
Vehicles
$5.9B
$4.1B
Wood
$1.7B
$1.8B
$1.4B
Copper
$1.1B
$1.0B
$0.6B
Soybeans
Soybean farmers saw exports drop by 80 percent. Almost 1 billion bushels of unsold soybeans are sitting in storage, a near record. That glut of beans and accompanying lower prices are expected to persist into 2020, according to government forecasts. The Trump administration is floating a proposal for $15 billion in payments to farmers to help cover trade war-related losses, on top of the $12 billion in such payments last year.
Although soybeans, the country’s largest farm export, are grown widely across rural America, the effects of the trade war may be most keenly felt in the upper Midwest. In recent years increasing exports to China have driven expansion of crop acreage, and a year ago, the harvest moved in trains of more than a hundred soybean-filled cars to China-bound ships near Portland and Seattle. “The farmers in those areas are taking more of a financial hit,” said Michael Steenhoek, executive director of the Soy Transportation Coalition.
Vehicles
The $1.9 billion drop in vehicle sales to China made just a 4 percent dent in overall U.S. exports of cars and trucks. The United States has threatened additional auto tariffs but they would be months away from taking effect, leaving time for trade disputes to be resolved.
So in South Carolina, one of the country’s top auto exporters, S.C. Ports Authority CEO James Newsome speaks of watchfulness rather than worry. A recent 30 percent drop in auto exports was not wholly due to tariffs, and it was offset by more exports of car parts. Newsome said BMW is making more cars than ever in the state, where it’s invested $9 billion.
But Newsome added that the world trade environment could change over time. “The automotive industry is probably the most global sourcing industry of all,” said Newsome. He added, “You can make a 60,000-dollar car anywhere and ship it probably for a thousand dollars.”
Wood
Wood exports to China dropped by $700 million, or 42 percent. Industries affected included firms that buy logs of hardwoods like walnut, maple and cherry and turn them into boards for furniture and flooring. Before the tariffs, about 1 in 4 of these boards went to China, said Michael Snow, executive director of the American Hardwood Export Council.
Snow said his industry is looking for alternative markets. “But at the end of the day, there really are no other markets out there that can absorb anywhere near the volume that China was taking in,” Snow said. He added, “If this continues for several months, I think there’s no question that we’ll see mill closures and layoffs in the industry.”
Some of the smaller targets of China’s retaliatory tariffs also lost a significant share of their export sales.
Falling exports across industries
targeted by Chinese tariffs last year
Exports to China for select industries for Oct. 2017 to Mar. 2018, prior to tariffs and Oct. 2018 to Mar. 2019, after tariffs were implemented
After tariffs
Before tariffs
Aluminum
$794M
Cotton
$695M
Seafood
$579M
Iron & steel
$463M
-30%
$414M
$407M
$336M
Dairy
$198M
$147M
Tobacco
$129M
$98M
$69k
Falling exports across industries targeted by Chinese
tariffs last year
Falling exports across industries targeted by
Chinese tariffs last year
Exports to China for select industries for Oct. 2017 to Mar. 2018, prior to tariffs and Oct. 2018 to Mar. 2019, after tariffs were implemented
Exports to China for select industries for Oct. 2017 to Mar. 2018,
prior to tariffs and Oct. 2018 to Mar. 2019, after tariffs
were implemented
After tariffs
Before tariffs
Aluminum $794M
Cotton $695M
Seafood $579M
Iron & steel $463M
-30%
$414M Aluminum
$407M Seafood
$336M Cotton
Dairy $198M
$147M Iron & steel
Tobacco $129M
$98M Dairy
$69k Tobacco
Falling exports across industries targeted by
Chinese tariffs last year
Exports to China for select industries for Oct. 2017 to Mar. 2018,
prior to tariffs and Oct. 2018 to Mar. 2019, after tariffs
were implemented
After tariffs
Before tariffs
Aluminum $794M
Cotton $695M
Seafood $579M
Iron & steel $463M
-30%
$414M
$407M
$336M
Dairy $198M
$147M
Tobacco $129M
$98M
$69k
Falling exports across
industries targeted by
Chinese tariffs last year
Exports to China for select industries for
Oct. 2017 to Mar. 2018, prior to tariffs and
Oct. 2018 to Mar. 2019, after tariffs were
implemented
After tariffs
Before tariffs
Aluminum
$794M
Cotton
$695M
Seafood
$579M
Iron &
steel
$463M
-30%
$414M
$407M
$336M
Dairy
$198M
$147M
Tobacco
$129M
$98M
$69k
Seafood
The lobsters pulled from the water in Maine are the same as those harvested further up the coast in Canada. But lobster sold from Canada to China faces just a 7 percent tariff, while tariffs on those sold from the United States now total 32 percent.
That difference is punishing the small Maine companies that market live lobsters, said Annie Tselikis, executive director of the Maine Lobster Dealers’ Association. These companies, which typically employ 50 to 200 workers, are also hampered by higher tariffs from the European Union, because Canada has negotiated an E.U. trade deal while U.S. negotiations have stalled.
“So we have already felt what trade disparity means to our industry,” Tselikis said. “To be going through this again with China is very frustrating for our businesses. This industry is incredibly important to the Maine economy. … Our fear is that this does eventually catch up with everybody, whether you’re a commercial fisherman or a truck sales company in Ellsworth, or you’re a fuel distributor. This is going to impact our economy.”
Dairy
A year ago, dairy farmers and manufacturers profited from China’s growing appetite for their products. That included whey, fed to piglets that in turn feed China’s growing demand for pork, as well as mozzarella to top the pizzas sold in China by American food chains. But dairy exports have dropped by half since last year, to about $100 million.
“The impact, that significant negative impact, has already happened,” said Jaime Castaneda, senior vice president at the U.S. Dairy Export Council.
The latest escalation began last week when Trump moved to increase taxes on $200 billion worth of Chinese goods. China answered by increasing even further the tariffs placed last summer on $60 billion in U.S. goods. This led Trump to start the process of implementing import tariffs on an additional $300 billion of goods.
That expanded import list would target almost every Chinese-made consumer product sold in the United States. While concern over tariffs is ratcheting up in the president’s own party, the trade war shows little sign of relenting with Trump considering it an asset for his 2020 campaign.
The impact of the tariffs imposed last year provides clues about how additional tariffs could affect the U.S. economy and attitudes. Higher tariffs from China would probably stifle exports. Additional tariffs on goods entering the United States, like those imposed last year on aluminum and washing machines, would probably push up domestic prices.
Supporters of Trump’s trade policy say that economic discomfort arising from China’s tariffs will be worthwhile when issues such as forced technology transfer are resolved in favor of the United States. But that can be little comfort to those whose declining trade is unrelated to those issues.
“It’s been a very frustrating time,” said Tselikis of the Maine Lobster Dealers’ Association, “and especially with regard to China. I mean, the lobster industry just feels like it’s collateral damage in a trade situation that’s really focused on intellectual property.”
About this story: The Washington Post used trade estimates from the U.S. Census Bureau to explore import and export trends before and after the onset of major tariff expansions in mid 2018. This analysis compared the value of goods traded between October 2018 and March 2019 with trade values from the same months a year earlier. These estimates are as of May 10, 2019.
