Who Will Take The Biggest Hit In U.S.-China Tussle?

April 05--Upper Midwest farmers and agriculture officials are waiting for the next move in the tariff-taunting game between President Donald Trump and China, with the outcome potentially having major effects on farmers in Wisconsin, Minnesota and the rest of the Midwest.

Ultimately, the increasing tariffs will be passed on to consumers, according to industry observers.

Trump insisted Wednesday that this isn't a trade war, although some financial officials regard that as a bit like putting lipstick on a pig and claiming it's not a pig. China's proposal to slap a 25 percent tariff on more U.S. imports, including hogs, soybeans and apples, in retaliation for Trump's plan to assess 25 percent tariffs on Chinese steel and aluminum was more like returning fire than just rattling a saber.

Farm states, many of which voted for Trump in 2016, could take the biggest hit as the tariff to-do unfolds.

U.S. farm exports to China in 2017 totaled nearly $20 billion, including $1.1 billion of pork products.

The emerging U.S.-China split is nothing like your father's divide between the countries, which was closed only with the unlikely hero of ping-pong diplomacy in the 1970s.

Wisconsin is in the hub position of U.S. soybean production, surrounded by the top three: Illinois ranks first; Iowa, second, and Minnesota, third. Wisconsin settles into the middle teens out of the 50 U.S. states.

Last year, Illinois' production was listed as 599.7 million bushels, Iowa harvested 557.2 million bushels and Minnesota, 339.4 million bushels.

Wisconsin, meanwhile, harvested a tad over 100 million bushels, a slight decline from the previous year.

Early signs recently indicated that farmers planned to increase soybean acreage substantially this summer, but that was before the tariff tiffs started.

The impact could be substantial, said Kaitlyn Lance, the University of Wisconsin's agricultural Extension agent for La Crosse County.

"Right now, there is a lot of back and forth" as the countries joust, Lance said. "We've got a lot of beef where farmers rely on soybeans to feed."

Even though soybeans are not a major crop in La Crosse County, they are increasing as farmers seek to diversify, especially with low milk prices slamming dairy farms, she said. USDA statistics also show that La Crosse County's yield of 55.4 bushels an acre is a nudge above the state average.

"Since 2014, a lot of dairy farmers are switching to crop rotations and corn and soybeans," she said.

Meanwhile, hog producers also could take a hit, with Iowa, Illinois and Minnesota being the top three pork-producing states, according to industry statistics, while Wisconsin comes in at 19.

One of the complicating factors in determining the effects of exports and imports is whether an export to another country is processed there and sent back to the U.S., thereby being tagged with two tariffs.

For example, some pork exported to China comes back as processed meat, thereby filtering the effects of the tariff down to consumers at grocery stores.

There is no indication yet whether Beijing might exempt Chinese-owned American suppliers such as Smithfield Foods, the biggest pork producer in the U.S. Smithfield is escalating exports to China.

The U.S. tariff hike "has seriously damaged our interests," the Chinese Finance Ministry said.

If China follows through on its tariff threats, another Coulee Region staple, apples, could be in the crosshairs.

Trump insists that tariffs are needed to decrease the United States' $556 billion deficit in goods and services trade.

After the Chinese government announced its retaliatory plan, Trump answered in a tweet, saying, "When you're already $500 Billion DOWN, you can't lose!"

BY THE NUMBERS: SOYBEANS AND HOGS

Soybean production in the Upper Midwest ranks Illinois, Iowa and Minnesota as the top three. Here are last year's figures:

Illinois: 599.7 million bushels

Iowa: 557.2 million bushels

Minnesota: 339.4 million bushels

Wisconsin: Just over 100 million bushels

Iowa, Illinois and Minnesota are the top three pork-producing states, according to industry statistics, while Wisconsin comes in at 19. U.S. pork exports recorded the largest year ever in volume last year, with sales to more than 100 countries. U.S. pork and pork variety meat exports totaled 5.399 billion pounds valued at $6.486 billion, up 6 percent and 9 percent, respectively, from 2016. The top six markets by value were:

Japan: $1.626 billion

Mexico: $1.514 billion

China/Hong Kong: $1.078 billion

Canada: $792 million

South Korea: $475 million

South America: $268 million

Sources: Multiple federal and state agricultural statistics

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