China's imports of American goods fell nearly 20 percent last month, but that's an improvement from June, when imports were down 31 percent.
However, China recently said they will suspend imports of U.S. agricultural goods, which means the American farming industry will take an even bigger hit than it already has in the increasing trade war with Beijing. Most recently, China said no to soybeans.
A former Iowa soybean farmer, Ron Heck, spoke with Maria Bartiromo on FOX Business' "Mornings With Maria" on Thursday about the significance the tariffs have had on the industry.
"Overall, U.S. farm profit has been cut in half over the last six years, from a little over $130 billion down to about $60 billion a year for all farmers," Heck told FOX Business. "Some sectors have been hit more than others. Soybeans are among the worst. And this is really unprecedented for, formerly, our No. 1 customer to have the government issue an order to not buy anymore. It's the height of market interference on their part."
It's the height of market interference on their part.
Despite the tariffs increasing the squeeze on the American farmer, Heck said he doesn't want President Trump to scale back tariffs.
"This was something that had to be done," Heck said. "China has been doing harm to our agriculture for many, many years. Going back 10 years, they have interfered, restricted with food imports from the U.S. They had entirely shut out corn before they started in on soybeans. Something had to be done. We were facing a shrinking market."
Something had to be done.
Heck believes farmers were going to lose the Chinese market anyway, regardless of the newly enacted tariffs.
"The Chinese government has kind of put us in a position where we had not much left to lose," Heck said. "I'm very pleased that our government is in the process of trying to do something about that, to reopen that market for the benefit of U.S. farmers and also for Chinese consumers."
But China is not the only market for exporting farmers. In fact, Mexico is a significant consumer of American agricultural products. Heck said his peers agree with the ratification of the United States-Mexico-Canada Agreement, which improves upon NAFTA since it may mitigate some of the issues American farmers have encountered with China.
"Mexico, Canada, China, Japan are our major customers," Heck said. "The approval of the USMCA is really at the very top of our list. The ag-trade benefits everyone in North America."
It's important to note that U.S. farmers aren't the only people impacted by this trade policy. Heck said Chinese consumers are greatly affected by it as well, noting that they are paying a great deal more on food because of restrictions.
"The policies of the Chinese government have made food more expensive in China than it should be," Heck said. "It's why our Chinese consumers would like to go back to buying from us because we have a good supply, great quality, we're reliable suppliers and [have] a lower price than what China has internally."
The policies of the Chinese government have made food more expensive in China that it should be
As for the long-term damage done to the farming community by this trade fight, Heck said while the $16 billion U.S. farm aid will help some farmers who are feeling the effects of the trade war, the trade payments are helpful but are much less than the total damage.
"We'd much rather have the trade than the aid," Heck said. "The aid is a short-term Band-Aid. The only real answer here is to go back to a system that is more open where our customers are allowed to buy our products."
The aid is a short-term Band-Aid.
Heck said farmers are carrying the extra inventory at their own expense.
"We are making more sales to more countries, but losing 1.3 billion customers in China is something you just can't make up," Heck said. "So, our leftover inventory at the end of each year keeps going up."
He's afraid it will be years before the farming industry will be able to sort this out and recover from it. No more help has been promised by the government, but the farmers hope they can work this out and that no further payments are needed. However, the aid is great to help the farmers pay their bills.
"China and the United States are really natural trading partners," Heck said. "Unfortunately, they're also natural rivals. But we need to have this rivalry issue settled and go back to trading. China benefits from buying our food, we benefit from buying Chinese products, and, hopefully, at one of these trade meetings, the presidents of the two countries will get together and agree to trading rules."
China and the United States are really natural trading partners. Unfortunately, they're also natural rivals.
Heck qualified that hope with the fact that the industry cannot have the Chinese trading enterprise just saying "no" to an entire industry, as that's the definition of unfair trading practices.