CHICAGO (Reuters) – The US-China trade war resulted in billions in losses for both sides in 2018, which fell on industries such as automotive, technology and agriculture in particular.
FILE PHOTO: Ship containers are seen on July 1
The widespread pain of trade tariffs outlined by several economists shows that specialized industries, including US soy-breaking, have benefited from it. The dispute had an overall negative impact on the world's two largest economies.
The losses could lead US President Donald Trump and his Chinese counterpart Xi Jinping to resolve their trade differences before March 2, although talks between the economic superpowers could still lead.
The US and China economies lose around $ 2.9 billion a year, due solely to Beijing's soybean, corn, wheat, and sorghum tariffs, said Purdue University agricultural economist Wally Tyner.
The disrupted trade in agriculture has hurt both sides particularly hard because China is the world's largest importer of soybeans and relied on the United States last year for an oil seed value of $ 12 billion.
China has mainly bought soy from Brazil since it introduced an American tariff for 25% duty in July as a retaliatory measure for US tariffs on Chinese goods. The surge in demand led to Brazil's soybean premiums reaching a record high on US soybean futures in Chicago. This is an example of the trade war that curtailed sales to US exporters and increased costs for Chinese importers.
"It's something that screams for a solution," Tyner said. "That's a loss for both the United States and China."
Total US exports of agricultural agricultural exports to China for the first ten months of 2018 fell 42 percent from a year earlier to around $ 8.3 billion in agriculture.
The most heavily traded soybean futures contracts averaged $ 8.75 per bushel from July to December 2018, compared to $ 9.76 in the same period last year.
On December 28, futures prices averaged $ 8.95-1 / 2 per bushel in the final month of the year. This was a decline of 9.61-3 / 4 for the entire December last year.
To compensate the suffering farmers, the US government, after consulting with economists, including Tyner, has provided about $ 11 billion in direct payments and the purchase of agricultural products for state food programs.
In North Dakota, which exports harvests to ports in the northwestern United States, soybeans face losses of at least $ 280 million on Beijing tariffs, said Mark Watne, president of the North Dakota Farmers Union.
"They could raise nearly another $ 100 million, because all commodity prices have dropped and that indirectly affects farmers in North Dakota," Watne said.
China's tariffs improved margins for US soybeans such as Archer Daniels Midland Co ( ADM.N ) by leaving abundant cheap soybeans on the domestic market.
Chinese soybean mills, on the other hand, collect the soybeans before customs. This resulted in oversupply, which reduced Chinese processing margins and led factories this summer to the biggest cuts in years for producing soybean meal used for livestock feeding.
China resumed US soybean purchases in early December after a ceasefire was agreed between leaders of both countries during the G20 summit in Argentina. Beijing, however, retained its 25 percent tariff on US oilseeds, effectively hampering commercial buying in China.
"With the tariffs, the beans can not enter the commercial system," said a manager of a major Chinese feed manufacturer who spoke on condition of anonymity. "The purchase will have a very limited impact on the market."
China also suffered as a result of products such as telephone batteries being hit by US tariffs and customers starting to buy from other countries.
A study commissioned by the Consumer Technology Association found that US tariffs on imported Chinese products cost the technology industry an additional $ 1 billion a month.
The conflict also exposed US retail, manufacturing and construction companies who had to pay more for metal and other goods.
"The price pressure on the entry price has increased partly due to tariffs, particularly in the manufacturing and construction sectors. Companies have struggled to pass on these higher costs to customers, "said the Federal Reserve in Dallas.
Detroit's three major automakers – General Motors, Ford and Fiat Chrysler Automobiles – have stated that higher tariff costs this year will result in a profit of approximately $ 1 billion.
The pain continues, say economists: Ford and Fiat expect similar success in 2019.
Report by Michael Hirtzer, Rajesh Kumar Singh and Tom Polansek of Chicago, Ann Sapphire of San Francisco, Humeyra Pamuk and David Lawder in Washington, Ben Klayman in Detroit and Hallie Gu in Beijing. Editing by P. J. Huffstutter and Jonathan Oatis