Winners and Losers in Trade War with China

All indications are that a trade war with China is looming. How will this impact international shipping? Which industries will suffer? Which will gain?

LOSER: Midwest Agriculture

Farmers in the Midwest will be particularly hard hit. China is the largest buyer of soybeans from the U.S. They purchase around one third of soybeans grown in the U.S. They also purchase a considerable volume of corn. China has hoisted tariffs that will make it much more expensive for them to purchase U.S. soybeans and corn.

WINNER: South American Agriculture

When a gap like this is created, it doesn’t go unfilled. Argentina and Brazil are both large growers of soybeans and corn. China will likely shift to South American growers if a trade war does develop in earnest.

LOSER: U.S. Car Manufacturers

Auto makers like Ford and General Motors split their production between various countries. Thus far, many cars sold in China are U.S.-made. With China planning to apply tariffs to U.S.-made cars, these auto makers are very likely to shift more car manufacturing away from the U.S. and into China. The same can be said for airplane manufacturers.

WINNER: Meat Processors

Much of the American cattle industry is still recovering from losing the Japanese market after withdrawal from the TPP. At least some of the meat processing industry has cheaper soybean feed to look at. This won’t by any means make up for the loss American farmers will take, but at least it’s a small silver lining.

LOSER: South Korea

At a time when South Korea could be using help in negotiations with North Korea, they’re expecting a hard economic hit. Many South Korean parts are used in electronics good made in China. With higher supply costs, Chinese manufacturing will become more expensive for U.S.-based tech companies, leading to more expensive phones, TVs, computers, and tablets.

REMAINS TO BE SEEN: Shipping

The impact on international shipping remains to be seen, but any trade war with China will mean fluctuation and consolidation of shipping routes. This may eventually mean slightly more affordable rates, at a trade-off of slightly longer shipping times. It also threatens lay-offs in American ports down the road, as shipping lines seek to cut costs and cargo decreases. That’s looking several steps down the road. Hopefully, a trade war with China can be averted.