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A trade war could hit Grundy County hard

Many of the products subject to proposed tarriffs made in region

MORRIS – As China and the U.S. set and exchange threats of tariffs, it turns out farmers and manufacturers in Grundy County could be caught in the middle of the potential trade war.

When China announced a list of 106 U.S. products that would be subject to the tariff, it included a number of items familiar to many in Grundy County: soy beans, corn, cornflour and several types of chemical products that are either manufactured at area facilities, or the area facilities are part of the supply chain.

Victoria Wax, manager at the Grundy County Farm Bureau, said farmers are going to be hit hard.

“When your looking at costs increasing, that’s going to cut into profits they’re making,” Wax said. Adding to the problems, 2018 is forecasting to be yet another down year for crops and commodities prices. Wax said it is looking to be the fifth-straight year of declining farm income.

Soybeans are big business in Grundy County. In 2017, 96,000 acres of soybeans were planted, yielding 5,485,000 bushels of soybeans. Even in a down year, that equals tens of millions of dollars in income.

About 30 percent of soybeans grown in the U.S. are exported to China, Wax said. And while the demand from China means they will always have to export some of the U.S.’ crop, she said higher prices means they could also look to places like South America for less expensive products.

On April 4, China announced the American products that would now be subject to tariffs when entering China. Tariffs are taxes or duties imposed on imports or exports by a country. Tariffs often will increase the cost of a product, and can be used to control imports or protect a country’s native industry.

The Chinese tariffs were a response to threat made by President Donald Trump to impose tariffs on Chinese products entering the United States. The tit-for-tat exchange has created fears of a trade war between to world’s two largest economies. The two nations are also some of each others largest trading partners.

The list of products impacted by China’s tariffs include numerous agriculture products, not just the corn and soybeans. Dried cranberries are on the list, along with wheat and sorghum, frozen meat, orange juice and various types of tobacco. Because the list is so varied, it could impact Grundy County farmers in various ways.

“It will be kind of a chain reaction,” Wax said. For example, if Chinese consumers purchase less American meat, then fewer American livestock will need to be fed corn and soybeans.

“This is a real concern to our membership,” Wax said.

In response, the farm bureau is encouraging its members to contact legislators and voice their concerns.

Industrial Impact

It’s not just agriculture that can be hit. Automobiles, aircraft and more than a dozen different chemicals are also included on the list.

Polyethylene is one of them, and it is one of the products manufactured at the LyondellBasell Morris Complex. The complex is one of the largest employers in Grundy County, with more than 300 employees, according to Grundy County Economic Development. LyondellBasell’s publications say it contributes more than $300 million into the local economy.

The company did not respond to a request comment, but it is represented by the American Chemistry Council, a group that represents more than 160 chemical companies across the nation. In a letter released by Cal Dooley, president and chief executive officer of the ACC, it said that chemical manufacturers support free trade, and that the tariffs are in large part targeted towards chemicals.

“China is one of the U.S. chemical industry’s most important trading partners, importing 11 percent, or $3.2 billion, of all U.S. plastic resins in 2017,” Dooley’s letter reads. “We are particularly concerned that 40 percent of the products to which China has assigned new tariffs are chemicals, including polyethylene, PVC, polycarbonates, acrylates, and others.”

Dooley urged the two countries to reach and agreement before the tariffs are implemented.

China appears to have cooled its rhetoric, with President Xi Jingping saying in a speech on Tuesday that he would like to work to open China’s economy, with the stock market responding positively to the results.

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