Brazil To See Huge Economic Stimulus From Trump’s Trade War With China

Farmers for Trump/Facebook

While U.S. soybean producers could lose $3 billion in the first year of tariffs, Brazil is poised to reap major rewards.

Brazil is poised to reap massive rewards of a continuing U.S.-China trade standoff as tariffs on soybeans lead China to purchase from the South American country over American producers.

According to Farzad Taheripour, a professor of agricultural economics at Purdue, the “trade war is a big gift for Brazil."

China has threatened $50 billion in tariffs on American exports -- including soybeans and other agricultural products -- beginning Friday. The move is retaliation for tariffs the United States imposed on China to combat "unfair practices related to the acquisition of American intellectual property and technology," President Donald Trump said. Rather than spur China to alter its trade policies, China punched back, putting the two governments in a standoff.

Caught in the middle are American farmers – particularly those growing soybeans.

"There are issues related to our trade dealings with China," said Grant Kimberley, the director of market development for the Iowa Soybean Association. "Trump's not wrong. But the stakes are pretty high here. We don't want to be the pawn."

The stakes are high because China buys roughly 30 percent of all America's soy. The proposed 25 percent tariff -- which is a tax buyers pay the government to purchase the commodity -- ensures Chinese buyers will look elsewhere.

A Purdue University study, conducted by Taheripour, estimated American soybean exports to China would drop about 65 percent if the tariffs remain in effect, collectively costing U.S. farmers $3 billion in just the first year.

But the benefit to Brazil could be immense, Taheripour said.

Brazil, which competes with the United States in soy exports, will see a huge economic stimulus.

"Brazilian farmers will do well with this," Taheripour said.

With the extra money, Brazil is planning to build roads and invest in other infrastructure in rural areas, Taheripour said. The new infrastructure will allow that country to not only increase their soy exports, but other crops as well.

Comments