“According to early indications, recent U.S. economic growth was full of beans.No, seriously. More than half of America’s soybean exports typically go to China, but Chinese tariffs will shift much of that demand to Brazil, and countries that normally get their soybeans from Brazil have raced to replace them with U.S. beans. The perverse result is that the prospect of tariffs has temporarily led to a remarkably large surge in U.S. exports, which independent estimates suggest will add around 0.6 percentage points to the U.S. economy’s growth rate in the second quarter.
Unfortunately, we’ll give all that growth back and more in the months ahead. Thanks to the looming trade war, U.S. soybean prices have plummeted, and the farmers of Iowa are facing a rude awakening.Why am I telling you this story? Partly as a reminder of the unintended consequences of Donald Trump’s trade war, which is going to hurt a lot of people, like Iowa farmers, who supported him in 2016.
In fact, it looks as if the trade war is in general going to hurt Trump’s supporters more than his opponents.Meanwhile, Trump’s trade war will benefit some unexpected parties. Was making Brazil great again part of his agenda?”