Trade War Hits Trump Heartland as China Targets Farms, Mines

China’s response to U.S. tariffs aims to hit the Trump administration right in its natural resources.

The world’s largest commodities consumer on Friday said it will levy a first round of tariffs on $34 billion worth of U.S. agriculture products, as well as automobiles, starting July 6. Another $16 billion in goods, including coal and oil, will be subject to tariffs later. The escalating dispute sent the prices of everything from soybeans to copper lower and hit the shares of U.S. coal producers while boosting the prospects for alternative suppliers like Brazil.

By focusing on agriculture and energy, the tariffs target rural communities in states that voted for Trump in 2016. Beijing’s announcement came less than 12 hours after the U.S. released its list of $50 billion worth of Chinese products subject to tariffs. As recently as May, the Asian nation said it would seek to buy more U.S. agricultural and energy products as part of a tentative trade truce between the two countries.

Agriculture

Farm commodities have been a key battleground in the trade war between the world’s two biggest economies. In April, the Asian nation started levying additional taxes on American fruit, nuts, pork and wine in response to Trump tariffs on steel and aluminum. Products affected include soy, corn, wheat, rice, sorghum, beef, pork, poultry, fish, dairy products, nuts and vegetables.

The list covers almost all farm products imported from the U.S., said Li Qiang, chief analyst with Shanghai JC Intelligence Co. Ltd. “Given China’s big trade surplus with the U.S., it will be more difficult and complicated for China” in the future to retaliate if Washington expands the tariff to cover more products, said Li. The new list includes more agricultural produce, including dairy, alfalfa and seafood, than its initial list published in April .

In 2017, China’s agriculture imports from U.S. were worth $24.1 billion, the People’s Daily reported on May 24, citing customs data. That’s about 19 percent of total farm imports worth $125.86 billion, according to Ministry of Agriculture and Rural Affairs data.

Coal

The coal tariffs strike at the heart of Trump’s energy agenda. Since he was elected, the president has been trying to make good on a campaign promise to revive America’s coal industry. They also come as U.S. miners have grown increasingly dependent on foreign markets for growth. U.S. coal exports jumped by 61 percent in 2017 as shipments to Asia more than doubled.

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