Having lived and worked in China for a number of years, I gained great insight into international trade and how it can work for–and against–a country’s economic benefit.
Given our current geo-political climate, I have not been surprised by any of the more recent developments, especially those involving China and the ripple effect on our farmers. The US will surely negotiate a more favorable agreement with the European Union to reduce tariffs, which, to date, have had an adverse effect on grain prices and sales. This should be followed up by the US moving forward on meetings with leaders from Mexico to renegotiate NAFTA. I suspect that this will be the turning point where crops will pivot back to winning.
I say this because I believe these two moves will put additional pressure on China and the US to come to the table for constructive talks. My thought on this from the beginning is the US would slap tariffs on everything ‘Made in China’. With an imbalance so large, the downside to China will have a far greater impact on them than it will to the US.
Here’s something to keep in mind: China has its own bank issues. And with over 1.2 billion people to feed, food isn’t something to play chicken with. For our farmer subscribers, as strange as this feels on your bottom line in the here and now, this is going to change for the better before we know it.