Trade wars affect what industries in the United States
In the early 1929, the U. S. stock market bubble burst, plunged into economic depression and banking crisis. In order to protect its economy and employment, the United States raised tariffs significantly and launched a global trade war. Then it immediately triggered retaliatory tariffs, even import quotas, investment restrictions, and devaluation of the exchange rate, which resulted in a serious deterioration in the international trade situation, the collapse of the international coordination mechanism and a worsening of the economies of all countries. In 2018, the United States launched a trade war against the world again, triggering strong opposition and counterattack. Since Trump came to power, the United States has implemented several protectionist policies, and the risk of trade war has become increasingly widespread. In the context of trade war, the United States has greatly increased tariffs on imports from other countries, which is bound to be countered by countries, and the tariff barriers facing American exports are bound to increase.
In fact, there are two main characteristics of the tariff policies introduced by each country: one is to levy a tax on the more flexible goods, in other words, the more flexible goods, in other words, are more convenient to obtain alternative products from other sources, which can reduce the loss of the country; two, if the purpose of the tariff is to let another country feel "painful". "It is best to aim at the areas that can make the economy suffer the greatest losses. Therefore, countries are more inclined to increase tariffs on pillar industries and large export industries in other countries. For the United States, the tariff pressure imposed on countries will be transformed into the pressure of various countries on their export products, and energy, soybeans and technology industries will bear the brunt.
Global supply and demand patterns or changers in Soybean
US soybean exports are huge, and are important pillar industries of American agriculture. China, the world's biggest buyer, needs soybeans from the United States. Now it is so, maybe in a few months or even next year. But in the longer term, it is not unreasonable for China to eventually withdraw from us soybeans, which may cause irreparable harm to the US market. In the long run, China may have a greater chance of getting more soyabean than American farmers, and underestimating China's ability to find and develop new sources of supply may cover up the risks faced by American producers.
China's soybean production can sustain its annual demand for 7 weeks, so China's soybean industry relies heavily on imports. First, the most obvious possibility is that China will actually increase production in the next few years, but competition between climate change and other crops may be a drag on this practice. For the Chinese market, it may be a better option to purchase other overseas markets. For example, the soybean export area of Brazil, the main exporter, has reached a record high in 2017/2018, and it may be rewritten in 2018/2019. At the end of the market sales cycle in Brazil, soybeans were almost sold out, so China would not be able to increase imports from Brazil only when Brazil did not increase its production.
In the past 20 years, however, Brazil has faced challenges and supplied more soybeans to the world. In the past 20 years, Brazil's soybean output has increased by 266%, while the US has increased by 63%. During this period, China's import volume increased by 32 times. It is possible for Brazil to expand agricultural land, but not necessarily. If China intends to reduce its dependence on the US supply, it is possible for Chinese investors to seek to buy or develop land in Brazil, South America or another African country, or other places suitable for planting soybeans and other crops. In recent years, analysts have been making such suggestions, and today such a possibility is especially meaningful. This may be the best option, because Brazil alone will push up the cost of soybean imports.
It may take at least a few years for China's overseas land investment to be realized, but it will be quite different for the U. S. soybean industry or the worst, because without China, the domestic market situation in the United States will be quite different. With reference to agricultural output data, in 2016/2017, the output of soybean in the United States was 1.169 million tons, of which about 44% were squeezed in domestic, 31% exported to China, and the other 20% were exported to other countries. With the same other conditions, if China eventually withdrew from the U. S. soybean market, the US would be looking for a global buyer for more than 30 million tons of its soybean. Because global soybean demand is not growing rapidly, American farmers may be forced to reduce their planting area on a large scale due to low soybean prices and low demand.
Corn may be greatly increased by filling a large amount of reduced soybean planting area. In time, a large surplus of corn may lead to a price restraint in the corn market, so if a trade war breaks out, it may be far more than soybean. In the next few months, American farmers watched soybean futures fall to nearly 10 years, and early this year they had some optimism about the price of soybeans.
Crude oil and liquefied natural gas export or hit
Trade friction also has a greater impact on the US energy industry. According to shipments and port data compiled by Thomson Reuters Oil Research and Forecasts, China has become a major buyer of American crude oil, with an import volume of about 319 thousand barrels per day in the first 5 months of this year. This makes China the largest net importer of American crude oil (Canada imports more, but it also exports crude oil to the United States), so China has become an important customer of the booming shale oil and gas industry in the United States.
The volume of US crude oil exports is about 2 million barrels per day, of which China's imports account for about 16%, but the US crude oil supply to China is only about 3.5% of its daily imports. This means
China's search for new supplies to replace US crude is easier than American manufacturers looking for new customers. It is not difficult to imagine a situation in which the world's largest oil exporters, Saudi Arabia and Russia are encouraged to increase oil production in China. China will then buy Saudi Arabia and Russia's new production to replace the United States and even Iran's oil, assuming the United States sanctions New Deal forces China to reduce Iran's crude oil imports.
In terms of LNG LNG, the situation is basically the same. China may be able to get LNG cargo from other suppliers to replace the US LNG. In the first 5 months of this year, US imports accounted for about 8.2% of China's imports of LNG, according to ship tracking data. However, China's total LNG exports account for about 22% of China's procurement, which means that China is more important to us LNG producers in terms of their importance.
For coal, most of China's imports from the United States are coking coal for steel making. The supply of coking coal is more concentrated, and Australia occupies the shipping market. But when Australia is not disturbed by weather related factors, China's demand for all coking coal may be satisfied from Australia instead of buying from us suppliers, although this may lead to a shuffle in the buyer's market. For example, Japan may increase imports from the United States and reduce imports from Australia.
On the other hand, China's import tariffs on us energy will strike Trump's support at the grassroots level. Coal miners are one of Trump's staunch supporters, but if China stops buying American coking coal, it may have to force coal producers to accept other buyers to lower prices to digest production. The oil and gas industry has also been seen as a support for Trump, which could force oil and gas producers to accept lower prices or even reduce production once they have lost such large buyers in China.
Automobile industry or vibration frequent
The advance of trade war prompted the us to reconsider the issue of the North American Free Trade Agreement (NAFTA). With the uncertainty of whether the United States remains in NAFTA, the United States and its trading partners will have many differences, and the 3 countries have been negotiating for nearly a year on the modernization of NAFTA. Automobile is a typical product in complex and Multi Country supply chain. The withdrawal of NAFTA from the US will strike automobile companies and their suppliers. As far as the car industry is concerned, the US trade negotiator has proposed a plan to introduce a new rule under the framework of the NAFTA, that is, to maintain a certain amount of car production in areas with higher salary levels in the automobile manufacturing industry. Setting this rule under the NAFTA framework will be beneficial to the United States and Canada.
Earlier, trade unions in the United States and Canada said Mexico's lower pay level attracted the automobile industry to shift more capacity to Mexico. According to sources, the purpose of the plan is to study the proportion of output in areas that pay higher salaries, and the level of compensation that the plan may be targeting. The Mexico government and NAFTA partners are also analyzing the idea of the United States.
In addition, the US trade representative's latest proposal to modify the proportion of NAFTA auto parts is to encourage an increase in American production, but industry people worry that it will eventually prove too costly. The main lobby group in the Mexico auto industry recently said it was "unacceptable" for the United States' latest requirements, which included the increase in the proportion of North American manufactured parts from 62.5% to 75%. It is estimated that car manufacturers are unlikely to give up investment in factories and supply chains for one billion US dollars. Those who do not meet the standard of passenger cars may pay a tariff of about $800 - 900 per car and buy low - cost components from Asia to offset the cost. "Overall, tariff increases are not enough to bring about large-scale changes." "No one may close an active factory in Mexico and replace a new factory in the United States," said Mark Wakefield, head of the North American automotive industry at AlixPartners, a consultancy.
As the Trump administration increased import tariffs on steel and aluminum, the problem became more complicated. Since taking office, Trump has consistently pursued the "American priority" policy, and has started to make a lot of fuss about import tariffs in addition to several "retreat groups". In March 2nd, Trump announced that the United States planned to impose a 25% and 10% tariff on imported steel and aluminum for a long time, and signed the decree in March 8th. Trump said that NAFTA was not a good deal with the United States, leading to high trade deficits with Mexico and Canada, and the transfer of large enterprises and jobs to the two countries. Trump's tweets show that "tariffs on steel and aluminum will be abolished unless new and fair NAFTA agreements are signed." As the largest importer of steel and aluminum in the United States, Canada has expressed strong opposition. Subsequently, the United States government said that, as NAFTA has not been finally signed, it will give temporary exemption from Canada and Mexico, temporarily relieving the tension. The shadow of the global trade war initiated by the United States is still fermented in the financial market.