WASHINGTON – President Trump's trade war is expected to temporarily support US economic growth, in part because Beijing has attempted to halt Trump tariffs by increasing American soybeans, crude oil and other exports.
Economists forecast that Q2 GDP could reach 5 percent if preliminary figures are released on July 27. The US trade gap with China has narrowed as more American products were shipped to Beijing before customs duties went into effect on 6 July.
But both effects are expected to be volatile, and the short-term economic improvement could turn into a long-term loss if both countries continue with their threats to continue escalation tariffs against each other. 1
The United States is conducting several trade wars simultaneously, as it imposes duties on metals from the European Union, Mexico, Canada and other countries. But it leads to an even bigger fight with China, a dispute that threatens to flood large parts of the world's two largest economies. The Trump administration accuses the Chinese of a variety of trade abuses, including theft of intellectual property, and denying American companies equal access to the Chinese market. Mr. Trump has already imposed $ 25 billion in tariffs on Chinese products, and has threatened to carry up to $ 450 billion in Chinese goods.
On Tuesday, the government released a list of another $ 200 billion in products that may face customs duties as early as September. China had already responded with its own tariffs on soybeans, pork, cars and other products, signaling that its next tariffs could also include US oil exports.
Growth in the United States has remained strong during Mr. Trump's customs acts. But they have shaken global markets and disrupted buying patterns between countries that have temporarily supported growth in the United States.
The value of US soybean exports more than doubled in May a year ago, according to Census Bureau data resulting from a rise in sales to Chinese and a fall in soybean prices. Data on soybean export inspections from the Department of Agriculture indicate that the surge continued until June and peaked the week Trump enforced its tariffs.
The increase in soybeans alone is forecasted by Mr. Shepherdson to increase America's annualized economic growth by 0.6 percent for the second quarter.
Soy farmers and economists say there is little to expect other than tariffs driving the rise in soybean purchases.
"They expected the tariffs to be imposed by the United States and then they would take their revenge," said Ron Moore, an Illinois farmer who is the chairman of the American Soybean Association. "I assume they were trying to get as many beans as possible before these tariffs were passed on to imports from the United States."
Mr. Trump tried to address the concerns of soybean growers in a tweet from Brussels on Wednesday where he is attending a NATO summit. He appeared to mention a 40 percent decline in soybean prices from $ 615 per tonne in 2012 – a short rise – to $ 368 in November 2016.
Chinese buyers also stored other products marked for customs duties. In May, US crude oil exports to China more than tripled a year ago. According to an analysis of the census data of Panjiva, a company that tracks world trade, exports of certain car parts used in vehicles manufactured in China also increased.
The Trump Administration's expectations for steel and aluminum have also increased American buyers are depositing foreign steel this year. Steel imports from Mexico, Canada and the European Union rose by about 25 percent in May compared to the previous year, before the government (19459010) decided to impose a 25 percent tariff on steel imports from these countries at the end of the month. Steel imports from China have risen by 5 percent; Mr. Trump imposed tariffs on Chinese steel and aluminum in March after his government proposed it earlier this year.
America's steel exports have also risen 4 percent over the previous year this year, according to Census Bureau statistics.  Economic growth has accelerated since Trump took office, and he is pleased that it will only grow in the coming years. Some of its economic advisors have stuck to forecasts of strong second-quarter growth as a sign that administrative policies, such as tax cuts, deregulation and trade strategy, are driving growth.
"Watch these G.D.P. numbers," the president said in Wisconsin late last month. "I think we'll see 4s and I think we'll see 5s as well."
Many forecasters predict that the US economy could reach or even reach 3 percent growth this year, but not reached 4 percent or 5 percent. In fact, growth will slow in the coming years as Mr. Trump's stimulus diminishes and increases government spending.
Chris Rogers, Panjiva's research director, said that "the customs excess is being used by China against China." US exports will inevitably have a negative impact on future growth as Chinese buyers find cheaper suppliers, especially for raw materials.  "Why should you pay more for crude oil from 6th July, if you could? it from Saudi Arabia or Iran? "Mr. Rogers said," Why would you pay more for soybeans if you could get them from Brazil? "
Carl Weinberg, the international chief economist of High Frequency Economics, wrote in a research note this week that oil and petroleum products America's exports have been hit by Chinese tariffs so far, and China will have no problem replacing them: "There's far too much less than a 25 percent premium over US prices," he wrote. Producers will have to get through to find new customers. "
Mr. Moore, the soybean farmer, said the Chinese are" rather crafty buyers of raw materials, "and he expects that purchases would drop after the imposition of tariffs. The cost of soybeans has plummeted on the world market, and his farm costs more as of $ 100,000 for this year's harvest.
He and other members of the Soybean Association flew this week to Washington to arrange a meeting to expand on Capitol Hill, discouraging lawmakers to work for the Customs Escalation
"This is our # 1 issue we are worried about," Mr. Moore said, "even the Farm Bill is on its back burner. Because it is so difficult for farmers to deal with this volatility.
Congressmen expressed concern about the tariffs and on Wednesday they took a step to warn the government of further escalation of its trade war, with a bipartisan group of 88 senators voted to pass a non-binding resolution The first step would be to give Congress a veto for reasons of national security, such as steel and aluminum tariffs.