The Trump administration's tariffs on another $200 billion in Chinese products went into full effect on Monday, escalating the trade war between the world's two largest economies. China countered with tariffs on $60 billion in US goods, a move that President Donald Trump warned he would slap taxes on another $267 billion in Chinese imports.
About one day before President Trump's tariffs kicked in, China published a four-page section in Sunday’s Des Moines Register, which had a disclaimer: “paid for and prepared solely by China Daily, an official publication of the People’s Republic of China,” featured an entire report that explained the impact of the trade war to Iowa's soybean farmers as "the fruit of a president’s folly."
"Pretty savvy political play being run by China," Tommy Vietor, a former national security spokesman for President Barack Obama, said on Twitter about the tactic.
Jennifer Jacobs, a White House reporter for Bloomberg News, said it "is like a 4-page tweet from the Chinese government."
Bloomberg said the propaganda targets a state critical to President Trump and Republicans at a time the trade war is spiraling out of control. The featured article warns farmers that President Trump's trade war has forced Chinese importers to halt US soybean transactions and turn to South America instead.
"As the largest importer of U.S. soybeans, China is a vital and robust market we cannot afford to lose," stated Davie Stephens, vice president of the American Soybean Association and a Kentucky farmer.
The trade disputes between the largest economies in the world risk triggering a global growth scare, in the near term, economists warn, adding that global supply chains of multinational companies could soon be disrupted.
Recently, China’s state council published a white paper on the trade dispute which criticizes the US for abandoning the fundamental norms of mutual respect and equal consultation that guide international relations.
“It (the US) has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China, intimidating other countries through economic measures such as imposing tariffs, and attempting to impose its own interests on China through extreme pressure,” the white paper said.
China on Saturday called off planned trade talks with US officials, and there is increasing concern that talks will not resume until after the midterm election. "President Trump has an excellent relationship with President Xi and our teams have been in frequent communication since President Trump took office,’’ Lindsay Walters, deputy White House press secretary, said in an emailed statement Saturday. “We remain open to continuing discussions with China, but China must meaningfully engage on the unfair trading practices.’’
Trump has attacked China for "taking advantage of the United States on trade for many years," and the tariffs via Washington imposed on Beijing is meant to be a response to the decades of intellectual property theft.
Bloomberg noted that besides the article about soybean imports, the Des Moines Register published an article titled "Beijing can set an example for the world," which told the story about Chinese President Xi Jinping’s “fun days in Iowa’’ during trips to the state in 1985 and 2012.
In July, China placed a similar article in the Roll Call, a newspaper that covers Congress and the US political scene, but this is the first time China has directly reached out to the American voter.
Iowa has been devastated by President Trump's trade war and retaliation by China and other countries, according to a recent US Chamber of Commerce. Total Iowa exports threatened by tariffs exceed $1 billion, including $30.8 million in soybeans, which threatens approximately 456,300 blue-collar jobs, according to the chamber.
The China Beige Book (CBB) showed producers are already under stress even ahead of the implementation of US tariffs, as indicated by an explosion in corporate borrowing.
Manufacturing’s "multi-year rally has given way to declining revenue and sharply declining profit growth," CBB International said in a report published Monday. "Critically, manufacturing’s plight is occurring before any meaningful American tariffs have been imposed. Absent a fall trade deal, this situation will likely deteriorate."
There are no winners in a trade war. China's article in the Des Moines Register on Saturday serves as a warning to Iowa farmers that the decades' long trade routes into the country could soon be terminated, as Chinese importers are now pivoting to South America. What comes next are supply chain disruptions, a global growth scare, and the inability of monetary & fiscal policy to stabilize global markets. The future is clear, and turmoil is ahead. Maybe it is time investors start discounting protectionism.