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Spokane, Washington  Est. May 19, 1883

No clear winners or losers in China trade dispute, WSU expert says

Jorge Bacquez holds the first of five bins of cherries he picked on Thursday, August 2, 2018, at Jake and Michelle Gutzwiler's orchard in Wenatchee. (Tyler Tjomsland / The Spokesman-Review)

The short-term results of President Donald Trump’s trade disputes with China are clear for Eastern Washington: The value of agricultural exports including wheat, apples and cherries will be reduced.

T. Randall Fortenbery, the Thomas B. Mick economics endowed chair at Washington State University, studied the impacts and said those damaging effects for Washington state are evident.

But he noted those advocating for this tough approach with China would likely say the short-term costs may be worth the long-term strategy. What the future holds, however, is unclear.

“There isn’t a winner so far,” Fortenbery said of the row between the U.S. and China. “That’s kind of a function of whether or not we continue to escalate the trade war or whether we are able to come to some sort of terms that result in us normalizing trade.”

The stock markets have taken a hit since Trump announced the new tariffs in a tweet Sunday. The tariffs are scheduled to go into effect Friday.

“The 10% will go up to 25% on Friday,” Trump tweeted. “325 Billion Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”

Chris McGann, Washington state Department of Agriculture spokesman, said the announcement had little impact on those in the agricultural industry since they have been dealing with the effects of the trade dispute since it began.

“As we’re coming into spring, there was some hope, but it was always tempered with uncertainty about how we never know how these negotiations are going to come out,” McGann said. “This latest development is disappointing, but it’s a continuation of the uncertainty our exporters have been dealing with for quite some time now.”

The disappointment some might feel is the dashed hope for progress, Fortenbery said.

“They’re already not buying any wheat, so it won’t have any impact on the wheat market,” Fortenbery said. “In all likelihood, where it might have an impact is that we’re going in the opposite direction that some of the agricultural producers hoped we would go. … It makes it even more challenging to have a positive impact.”

Glen Squires, Washington Grain Commission CEO, said when the initial tariffs were announced, China stopped buying wheat before the tariffs were even applied.

“I don’t know if this is just more negotiation going on, but ultimately we want to be able to have trade,” Squires said. “They want to buy our wheat, and we want to sell it to them.”

Fortenberry said the country hasn’t seen such broad, comprehensive trade disputes in 90 to 100 years, noting that we have also been in dispute with Canada and Mexico, the European Union, and backed out of the Trans-Pacific Partnership.

“China is just one piece,” Fortenbery said. “ … In terms of the broad approach to this, the number of countries that we are engaged with, we haven’t seen something like that since probably the 1920s.”

The goods the U.S. imposed tariffs on is broad, as well. Fortenbery said he understands the U.S. has problems with China’s history with intellectual property theft, but doesn’t see how the issue is related to many of the goods affected.

“What is interesting and what hasn’t happened in the past is such a broad approach to almost everything being traded,” Fortenbery said. “We have a tariff on bicycles. Well there’s not really a lot of intellectual property being stolen in the bicycle industry.”