The escalating trade war with China has now extended to some of Ohio’s biggest exports.
On Wednesday, just hours after the Trump administration detailed its plan to impose tariffs on Chinese-made touchscreens, aircraft parts, televisions, steel products and more, China announced its own proposal of tariffs on 106 categories of U.S. goods exported to China, including soybeans, airplanes, cars and chemicals.
The Chinese tariffs, if implemented, will not take effect for weeks, but they would be felt by many Ohioans. China is Ohio’s third-largest export market, with $3.9 billion in Ohio-made goods shipped there last year, according to a state report.
Canada and Mexico are Ohio’s largest trading partners, but China’s potential market is much bigger and growing faster.
"If this was Mexico, it would be worse," said Ian Sheldon, a professor of agricultural economics and international trade at Ohio State University, "but China is an important market, and it is an expanding market."
Ohio’s farmers would be the first to be affected by the tariffs. China is the top market for soybeans, Ohio’s largest and most-valuable crop. Ohio farmers sowed 5 million acres of soybeans last year (half of the state’s arable land) and exported $1.8 billion worth of the crop. China bought more than $691 million worth of soybeans from Ohio in 2017, down from $1.1 billion worth in 2016.
A 25 percent tariff, which is what China has proposed, would be a big blow.
"This will be tough to take," said Bret Davis, a Delaware County farmer and member of the governing board of the American Soybean Association. "China takes one out of every three rows (of soybeans)."
In early trading Wednesday, soybean futures were off 40 cents a bushel, a drop that would cost Davis about $35,000. "And the tariff hasn’t even been enacted," he said.
Prices did improve some later in the day.
"That’s real money lost for farmers, and it is entirely preventable," the American Soybean Association said in a statement. "It should surprise no one that China immediately retaliated against our most-important exports, including soybeans.
"We have been warning the administration and members of Congress that this would happen since the prospect for tariffs was raised," the statement said.
China still will need to buy American soybeans because there isn’t enough capacity in Brazil and Argentina, the largest South American producers, to satisfy China’s appetite, but the tariff will shift the power in negotiations between buyers and sellers.
"It gives the buyer a tremendous amount of leverage to lower the price of American soybeans," said Matt Roberts, an independent agricultural economist and principal of the Kernmantle Group of Columbus.
Lower prices would effectively pass much of the tariff onto American farmers instead of Chinese consumers. It also would depress demand for American soybeans, giving other markets negotiating leverage as well, which would help keep prices lower overall, Roberts said.
"I don’t think it will happen; something will be worked out," Roberts said, "because if it happens, that would be catastrophic."
Sen. Sherrod Brown, D-Ohio, supports President Donald Trump’s tariffs on Chinese goods, but he hopes negotiations side step a trade war.
"China cheats — that’s what these tariffs are all about. So it’s no surprise they’re playing dirty when we try to enforce the rules and we need to support industries that are hurt, including Ohio soybean farmers," he said. "We should use these tariffs to force China to the negotiating table and secure changes that benefit all U.S. industries."
At the Columbus Zoo and Aquarium on Wednesday as part of a three-state tour, Agriculture Secretary Sonny Perdue said farmers have a right to be nervous about the possible tariffs.
"There is legitimate anxiety," he said.
He added, however, that he and others in the administration have counseled Trump on the state of the American farmer and how little margin farmers have to work with before any sort of tariff kicks in. He said Trump understands what is at stake.
"(Trump) told me, ‘Tell the farmers that I will not allow them to become casualties in this trade dispute,’" Perdue said.
Ohio also exports a lot of cars and auto parts made by Honda, Ford, General Motors and Jeep. The state also makes airplane parts, including engines produced by General Electric in Cincinnati.
China buys more than $500 million worth of machinery of various sorts from Ohio, which includes car and airplane engines. The tab is about $286 million for vehicles and car parts.
Chinese retaliation for the Trump administration’s latest move had been expected. Beijing often responds to overseas tariffs with similar ones of its own, and Chinese officials had promised a proportional response if the Trump administration went with broad tariffs on Chinese goods.
Still, Chinese officials said Wednesday that they see room to negotiate.
"China’s attitude is clear," said Zhu Guangyao, the country’s vice minister of finance. "We don’t want a trade war because a trade war would hurt the interests of both countries."
Trump, on the other hand, has said on Twitter that trade wars are easy to win.
"That’s complete nonsense," Sheldon said. "This is not going to bring back any jobs to the U.S."
Dispatch Reporter Jack Torry and The New York Times contributed to this story.