An epidemic of pig Ebola is poised to give the Trump administration substantial leverage in the president’s trade war with China.
The Daily Caller reports:
The threat to food availability and security from Chinese pig Ebola and fall armyworm will prevent China from aggressively using tariffs as an offensive weapon against the U.S. over the coming year. Just as the poor structure of China’s leveraged economy necessitates that they return to the negotiating table with the U.S. — the largest buyer of its goods — food insecurity in China will oblige them to put aside their main retaliatory tool and start earnestly negotiating with the U.S.
President Trump needs to both recognize his leverage in these trade talks and have the confidence that China’s primary source of counter-leverage has a short expiration date.
The structural state of China’s economy is in peril after a decade of reckless credit growth. Following the great financial crisis, the Chinese government pursued economic growth at all costs, which has left them with high financial leverage and bad debts. As a result, China’s U.S. dollar shortage has become acute. These structural problems leave the Chinese economy and financial system vulnerable to a slowdown.
In response to the imposition of U.S. tariffs, China retaliated by imposing tariffs on 99% of all U.S. agricultural exports. These were devised to hurt senators who represent agricultural states ahead of the 2020 election. Understandably, U.S. farmers and their political representatives have reacted with great alarm. Currently U.S. pork exports to China are subject to a 62% tariff and soybeans are subject to a 27% tariff, while chicken exports are outright banned. U.S. farmers are hoping these tariffs will be lifted imminently as part of an eventual trade deal.
However, the pain inflicted on U.S. farmers will be temporary and mild compared to the combination of challenges facing China: Chinese pig Ebola and fall armyworm.
The one-two punch of those threats have already diminished Chinese agricultural production and are expected to take an even greater toll next year.
Moreover, China is the world’s largest consumer of pork – making it highly likely they’ll have to import massive amounts from the United States.