Need to Know
November 30, 2018 5:09 PM
Trump's One Big Advantage Going Into Trade Talks With Xi
Posted by Staff

President Donald Trump and his party took a drubbing in the midterm elections. But the results held a bit of good news for Trump as he prepares to meet with Chinese President Xi Jinping at the Group of 20 meeting in Argentina: the $50 billion in retaliatory tariffs China targeted at Trump-friendly congressional districts failed utterly to cause the kind of political pain that would have weakened Trump’s bargaining position.

Let’s rewind to March, when Trump fired the first big volley in the trade war by imposing tariffs on imported steel and aluminum. China’s foreign minister, Wang Yi, vowed a “justified and necessary response,” and in April, China hit back with levies on U.S. exports, including soybeans, wheat, sorghum, and other crops selected precisely to exact a political price on Republicans in November. 

Take soybeans. At the time, China was the largest buyer of U.S. soybeans—it imported $14 billion of them in 2017—so the tariffs would be sure to hurt U.S. farmers. In April, I built a model to see which U.S. House districts were most vulnerable and discovered that 25 of the top 30 districts most reliant on soybeans for economic activity were represented in Congress by Republicans. All of them—even the five repped by Democrats—voted for Trump in 2016.

The tariffs did indeed hurt U.S. farmers. As Deutsche Bank’s Torsten Slok has noted, U.S. soybean sales to China are down a staggering 98 percent this year. As markets wobble, the economic damage is becoming clearer. But the political fallout China was anticipating never materialized. When I went back to my model and plugged in the 2018 election results, I found that Republicans lost a net total of one House seat in soybean country. One! Of the 30 districts, just three switched parties. Democrats took Iowa’s 1st and 3rd congressional districts, and Republicans won Minnesota’s 1st district, vacated by Democrat Tim Walz, who was elected governor. Facebook iconFacebook Fark iconFark Furl iconFurl
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