Checkpoint Asia

In Trade War, China Carpet Bombs Trump Supporters

China has heartland swing states under de facto sanctions

Everyone agrees that China is not a full-fledged market economy. It’s a Communist government, a one-party town. They do what Beijing says, for the most part. If you believe China is not a full-fledged market economy, with little state intervention in pricing, then it is not a radical step to assume China can circumvent Trump’s trade tariffs.

“In lieu of rescinding tariffs during the trade war truce, China soy importers have the government make their purchases in order to keep (them) from having to pay the tariff,” says Brent Bible, a soy and corn farmer managing around 5,000 acres of land near Lafayette, Indiana.  “The government makes the purchase then turns around and sells it to the private Chinese users,” he says.

Instead of buying U.S. soybeans, now priced 25% higher than usual, China went to the No. 2 soy exporter, Brazil, and bought 10 million more tons.

Brazil and U.S. soy harvests run at different seasons. China isn’t just buying from the U.S. because Brazil is now cheaper due to tariffs. China isn’t buying from the U.S. because the heartland, the red states that sell them soybeans and animal meats, is essentially under Chinese sanction. They are being targeted in an effort to turn voters against Trump in 2020.

It worked in the midterms. Democrats beat Republicans easily in farm counties throughout the farm belt in November, giving the Democrats the House of Representatives.

Trump voters are the biggest casualty in the trade war, not your investment portfolio.

Source: Forbes