On Sunday, President Donald Trump took to Twitter to announce an unforeseen increase in tariffs, which goes into effect on Friday. This announcement comes right before Chinese officials were scheduled to visit Washington this week to potentially finalize a deal. Trump tweeted that tariffs on $200 billion of goods will increase from 10 to 25 percent on Friday due to the slow nature of negotiations. For farmers, this was devastating news as grain prices were just on the rise last week. Unfortunately, the markets have crumbled after opening up today.
For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….
— Donald J. Trump (@realDonaldTrump) May 5, 2019
The tweet continues, “of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”
To no surprise, this had a major impact on the grain market. When markets opened up Monday morning, May corn was down 13 with May soybeans seeing the biggest decrease, down 24. Just when farmers were seeing a small light last week on grain prices, it faded quickly after Sunday’s tweet. Prices were on the rise due to the recent unpredictable weather.
According to Fox Business, this has not changed travel plans for Chinese trade officials. Chinese authorities still plan on sending officials to the U.S. to continue trade talks. However, the trip was pulled off the official calendar for Vice Premier Lie He.
In a statement from Tariffs Hurt the Heartland, they reiterate the harm increasing tariffs would bring. “For 10 months, Americans have been paying the full cost of the trade war, not China. To be clear, tariffs are taxes that Americans pay, and this sudden increase with little notice will only punish U.S farmers, businesses, and consumers.
“Doubling down on taxing Americans as a negotiating tactic only makes a bad situation worse. Taxing Americans when they buy furniture, tools, electronics and groceries should have nothing to do with reaching this agreement. This isn’t leverage to get a better deal, it’s taking money out of the pockets of hard-working Americans.
“If the President follows through on this threat, the consequences will be dire. Raising tariffs to 25 percent could cost nearly one million American jobs, according to recent estimates. This decision will also roil financial markets and increase the likelihood of retaliation on American farmers who are facing the lowest income levels in years.
The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!
— Donald J. Trump (@realDonaldTrump) May 6, 2019