SD Ag Economist: Trade Disagreement Will Have Long-Term Impacts

May 14, 2019

Credit Kealey Bultena / SDPB

An agricultural economist says South Dakota is feeling the effects of tariffs imposed on goods between the US and China.

He calls the Trump Administration proposal to buy up domestic commodities and redistribute them as food aid to other countries a “band-aid.”

The last time soybeans prices were this low was December of 2008. For more than a year, China has imposed a 25 percent tariff on soybeans from the US.

Evert Van der Sluis is an agricultural economist with South Dakota State University.

He says the US agriculture industry is reliant on China for importing commodities like soybeans. He says this disagreement will have long-term effects.

“Because of these tariffs it has made it more difficult for the United State to compete with other countries, like Brazil, when it comes to shipping soybeans to China,” Van der Sluis says. “That has changed these supply chains. Of course, when it comes to international trade, it relies a lot on trust. Building relationships, so that we can sell product, buy product, and once that trust is gone it may be difficult to reestablish these relationships.”

Over the weekend, President Trump proposed the US will buy up American crops and redistribute them as food aid.

Van der Sluis says that’s a band-aid that would temporarily help American farmers by getting more cash in their pockets.

He says America should only use food aid for times when people in countries really need it, when populations are starving.

“But aside from that you try not to do that because that messes with local markets,” Van der Sluis says. “That means the local farmers that were previously producing their products for local consumers, they’re going to be hurt. That is not necessarily a good policy.”

Van der Sluis says it’s something that works in the short term for US farmers, but isn’t a good solution to establish trade relationships overtime with developing countries.