China / Economy / Politics / Tariffs / Trade

Trump States Will Be Hit by Chinese Pork Tariffs

Yesterday, the Chinese Ministry of Commerce imposed retaliatory tariffs on 128 U.S. products totaling $3 billion “in order to safeguard China’s interests and balance the losses caused by the U.S.” The tariffs, initially threatened in March, are the Chinese response to the Section 232 measures on steel and aluminum imposed by President Trump earlier that month.

Several U.S. products will face a 15% tariff, including fruits, nuts, and wine. More notably, the Chinese targeted U.S. pork products, which will face a 25% tariff.  This tariff exposes $237 million of U.S. pork exports to increased taxes from China.

At face value, a Chinese tariff on U.S. pork products may seem largely inconsequential. In 2017, just 5% of U.S. pork exports went to China. Iowa for example, which is the largest pork exporter in the U.S., sent just over 1% of its pork exports to China.

However, the Chinese market is much more important for other major pork exporting states, including states where President Trump has enjoyed strong support.

In 2017, the top five pork exporters to China were North Carolina, Missouri, Oklahoma, South Carolina, and Georgia. In these states, the shares of pork exports to China are significant, as shown in the table below.

Screen Shot 2018-04-02 at 9.55.47 PM.pngSource: USA Trade Online

Of the $381 million in total pork products exported by North Carolina in 2017, over $56 million was exported to China. In South Carolina, $27.5 million was exported to China out of $73 million in total. In Georgia, total pork exports were $53 million, and $22 million was exported to China.

In these states, a 25% tariff imposed on pork products exported to China will have a significant impact on producers.  In 2016, President Trump won all five of these states, and according to a recent Gallup poll, the President maintains an approval rating above the national average in each of these states.

Furthermore, President Trump praised American farmers in states like Missouri and Oklahoma on National Agriculture Day, ensuring that his Administration is “DELIVERING for them!” Just days later, the Chinese announced tariffs that will directly harm the American agricultural community.

During the election, then-candidate Trump promised to take a hard stance on U.S. trade policy towards China. President Trump followed up on these promises in March by imposing tariffs on steel and aluminum under the guise of national security concerns as outlined in Section 232 of the Trade Expansion Act of 1962.  However, the President later touted the tariffs as protection for American steel and aluminum workers.

The President’s trade policy fails to anticipate retaliation.  As the Chinese tariffs reveal, the losers of the President’s lack of foresight are likely to be many of the Americans who voted for him.  A measure originally meant to protect steel and aluminum workers in Pennsylvania, Ohio, and Indiana has now resulted in retaliation that will harm pork producers in North Carolina, Oklahoma, and Georgia.

This round of Chinese tariffs are just in reaction to the 232 measures, so it’s likely that further action will come in retaliation to upcoming U.S. tariffs, which are set to be imposed on up to $60 billion worth of Chinese products.  American pork producers are among the first to be harmed by a long-feared trade war between China and the United States, but it’s unlikely that they will be the last.