STORE

Rick Manning: China Only Hurts Itself with Tariffs on ‘Fungible Commodities’ that U.S. Can Sell Anywhere

China announced plans to hit the United States with new tariffs of 25 percent on soybeans, aircraft, cars and other imports worth $50 billion, hours after Washington unveiled its own target list
AFP/YASUYOSHI CHIBA

Rick Manning, president of Americans for Limited Government, rebuffed warnings of economic damage to the U.S. via pending Chinese tariffs on certain U.S. agricultural and foodstuff exports. In that interview Wednesday with SiriusXM’s Breitbart News Tonight with co-hosts Rebecca Mansour and Joel Pollak, he said U.S. exports of fungible commodities, such as corn, pork, and soybeans, will be purchased by other countries if Chinese tariffs make them too cost-prohibitive for purchase in China.

Chinese state officials described their incoming tariffs as retaliatory measures against the Trump administration’s implementation of tariffs on $50 billion worth of Chinese imports across 1,300 product categories.

LISTEN:

Manning dismissed predictions of economic harm befalling the U.S. via China’s proposed tariffs on fungible products such as soybeans and other foodstuffs, given their status as global commodities. He explained, “Soybeans are a fungible commodity. If China is going to still buy the same number of soybeans from somewhere in the world market, what that means is there’s the same number of soybeans in the world market. It just means that there’s a hole somewhere else that U.S. soybeans will be sold to without the tariff. So China will still buy the same number of soybeans from somewhere in the world, and then the U.S. … will still end up exporting the same number of soybeans because the consumption isn’t going to change.”

Manning also noted the fungibility of pork, saying Chinese tariffs on U.S. pork exports would raise prices of pork in China without diminishing global demand. “If you’re exporting a certain number of pork products to China, and they say, ‘We’re going to put a tariff on that, and as a result, it’s not going to be as easy to sell it to Chinese because the price is too high,’ all that means is they’re buying pork products somewhere else, and within a period of two years, you’re not going to be able to replicate the amount of the export to China that we would be doing. So they’ll sell the pigs to South Korea as opposed to selling them to China, and it won’t really make a difference in the short-term. In the long-term, it can make a difference. … In the short-term, it’ll have no effect.”

Manning added, “They are far more dependent upon sales to the U.S. economy than we are on sales to the Chinese economy, and the things we sell them are things that are like money, fungible.”

According to Manning, China has been waging a trade war against the U.S. for decades. He said, “President Trump was right when he said the Chinese have engaged in a trade war against the United States for quite awhile. We just have actually stood up for our own interests in that process, and, as a result, in 2017, the United States ran a $375 billion trade deficit with China. The largest trade deficit that we have ever run with China. China exports about $506 billion worth of goods to the United States. The United States exports about $130 billion worth of goods and services to the Chinese, and so there is a vast disparity between [the U.S. and China]. to put these numbers into perspective, they are exporting three times as much to the United States as we export to them.”

Manning noted the growth and size of China’s economy relative to the U.S., saying, “The Chinese have a larger economy right now than the United States does, and most people don’t recognize that. … The Chinese now have the largest economy in the world. It is larger than ours by about $2 trillion, according to the CIA World Factbook. So we’re not talking about an undeveloped economy here. We’re talking about an economy that is large, robust, has a lot of people, obviously, and yet they produce and send more than three times as many goods and services than we provide to them.”

Manning called for a reduction in America’s trade deficit with China. “So there is a disparity in the trade arrangement,” stated Manning. “It’s a trade arrangement that’s been jimmied by the Chinese by doing currency manipulation to make sure prices of Chinese-made goods are always cheaper than American-made goods.”

Mansour asked if America has the political will to endure China’s proposed tariffs on American goods, to which Manning replied, “The one thing that foreign adversaries — whether its in the field of a traditional military battle or cyberwarfare or trade environment — can generally count on is Americans have a low patience level for pain, and just the threat of pain is enough to cause various interests to go wild.”

Pollak speculated that Wednesday’s stock market performance refuted warnings of those opposed to President Donald Trump’s tariff policies. He said, “The stock market was supposed to tank today, and it dropped 500 points at the open, but it recovered and ended well into positive territory, over 200 points, I think it rose, so apparently, that was only the third time in history that the stock market had recovered from that kind of an opening loss.”

On Monday’s edition of Breitbart News TonightChina expert Gordon Chang framed America as in a stronger economic position than China, saying, “We’ve got a stable economy, and they’ve got a fragile one heading towards a debt crisis. You put that all together, and it gives the United States enormous leverage, and President Trump, unlike his predecessors, understands the American power that we have and the imbalance in power between China and the United States.”

Chang further explained that “China cannot stand a prolonged trade war with the United States, so for them to do this, they are risking not only their economy and financial system, but they’re also risking their political system because their political system is fragile, and it depends upon the continual delivery of prosperity.”

Chang also agreed with Manning’s assessment of the risk posed to China’s own economy via its implementation of tariffs on fungible U.S. goods. He argued that China’s ability to economically damage American farmers is limited, given the power of global markets for such commodities. “[China] can put tariffs on our goods, but they really need them because they need good quality food. But also, even if they were able to shut us out of their market, it means that China would have to buy this stuff from somebody else,” said Chang.

So if China were not to buy U.S. soybeans, they’d probably buy them from Brazil. That means American producers would sell to Brazil’s traditional customers because there are only so many soybeans that Brazil has at the moment. So, basically, there would be a changing of customer lists, but there probably wouldn’t be that much in the way of real long-term damage to the American economy. So China can huff and puff, but when you look at the way global markets work, we probably are not going to be hurt nearly as much as people think.”

Breitbart News Tonight broadcasts live Monday through Friday on SiriusXM’s Patriot channel 125 from 9:00 p.m. to midnight Eastern (6:00 p.m. to 9:00 p.m. Pacific).

Follow Robert Kraychik on Twitter @rkraychik.

.