The U.S. and China have been at odds over trade policies for several months now, with each nation throwing tariff after tariff in a tit-for-tat dispute that’s damaged certain sectors of the economy, including in the Natural State.
But recent developments in the last several weeks may show tensions are decreasing, even if only a little.
Matt King, director of national affairs for the Arkansas Farm Bureau, is no stranger to how our state’s agricultural economy works. He’s a former agriculture economist and used to cover soybean crops. He says Arkansas farmers and the bureau are watching closely for any kind of development in this trade dispute with China.
“Our farmers are very concerned about this,” he says.
One of the biggest crops hit by this trade dispute? Soybeans. King said 60+ percent of our state agricultural exports go to China – that’s one out of every three rows of soybeans. Those numbers have changed as a result of the trade dispute.
“We’ve seen these exports decline dramatically,” King says.
One of the biggest problems caused by this trade dispute is uncertainty in the market, according to King. It’s winter now, but Arkansas farmers are looking ahead to spring.
“A major challenge is trying to figure out what we’re going to grow,” King says.
Further complicating matters, the government shutdown means the United States Department of Agriculture isn’t releasing estimates for last year’s crops, important data Arkansas farmers need to plan for this year.
Randy Zook, president and CEO of the Arkansas State Chamber of Commerce, echoed King’s note on uncertainty being a large problem for the state’s economy.
The CEO says he’d like to see trade tensions dissolve and eliminate the uncertainty in the air.
And that may be in the cards. CNBC reported China has offered a six-year increase in U.S. imports during trade talks taking place over the last few weeks. This deal would seek to reduce the annual U.S. deficit to zero by 2024, according to Bloomberg.
After this deal was reported, U.S. stocks picked up with the DOW jumping more than 300 points, CNBC reported.
Zook says lowering trade tensions with China has a big impact and positive development on Arkansas, especially for the agriculture and steel industry in the Natural State.
“We’re anxious to see that get resolved,” he says.
If the economic uncertainty goes away, Arkansas businesses can get back to making plans and getting new customers, according to Zook.
Farmers in Arkansas are looking for stable markets and increasing soybean prices, King says. When prices get back to a stronger level, that’ll increase farmer confidence.
“We need to see these prices rise,” King says.
And it’s not like the U.S. is trying to force China to take unwanted products, King says. With a swine flu outbreak and lowering pork production in China’s agricultural sectors, the country needs American soybeans.
The trade dispute with China is in the hands of President Donald Trump and President Xi Jinping. All Arkansas businesses and farmers can do is wait and hope recent easing of tensions are a good sign of things to come.