Wednesday, 4 April 2018 ()
China retaliated quickly on Wednesday after the U.S.’s announcement that it would impose tariffs on US$50bln of Chinese goods. China’s Ministry of Commerce issued a list of 128 US goods that would be subject to tariffs. Of the goods to be tariffed, over 100 products, including fresh and dried fruit, wine, modified ethanol, and ginseng, will receive a 15% import tax. The remaining products, which include a variety of pork products and stainless-steel aluminum, will be taxed at a rate of 25%. Several industries will be affected by the tariffs, but the agricultural industry will be hit particularly hard. The U.S. farm belt, home to many Americans in President Trump’s voter base, will feel the effects of the tariffs. China is the largest buyer of U.S. soybeans, importing US$14bln worth of the crop in 2016. After the 25% tariff was announced, soybean futures were down by 4%. “Some of these things can have unintended consequences on middle America and on farmers. You know, farm income is down 50% since 2013. This is just really not the time to have a day where we’re down 30-40 cents in soybeans,” said Brandon Wipf, an American Soybean Association board member, in an interview with Brownfield AG News. Great Bloomberg chart showing "Soybean Voters" who'll get slammed by Chinese tariffs. Won't be pleasant for Midwest Republicans this November. pic.twitter.com/OToevIF3Df — Joshua Green (@JoshuaGreen) April 4, 2018 The tariff on U.S. pork will also be a strain on middle American and its farmers. Shares of Tyson Foods Inc. (NYSE:TSN) fell 6.3% on Monday after the 25% tax was announced. The tariffs will take a toll on the airline industry as well, with American-made aircraft being subjected to a 25% tariff. Shares of The Boeing Company (NYSE: BA) dropped 5% in pre-market trading in the wake of the news. Boeing’s 737 model will be subject to the tariff, while newer models and its larger planes will not. The auto industry won’t be immune to the potential trade war either. Shares of General Motors Company (NYSE:GM) dropped 3.5% on Wednesday. The Ford Motor Company (NYSE:F) saw its shares down 2.8%. “We encourage both governments to work together to resolve issues between these two important economies,” said Ford in a statement. A few industries have been spared from the incoming tariffs. Consumer technology, like Apple Inc.’s (NASDAQ: AAPL) iPhones and Dell Technologies Inc.’s (NYSE: DVMT) laptops, will not be affected. The retail industry is also off the hook as clothing and footwear did not make the list.