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| I've been reading thru all the posts by those people trying to rationalize and justify trump's trade war. All those people saying that the Chinese will be forced to buy US soybeans even at the 25% higher price. That it's the American soybean farmer's patriotic duty to suffer this economic hardship to make China safe for the big multinational corporations so they can make billions in China.
I'm going to make this prediction. It won't matter what the weather is, or the size of the crop or any other parameter that affects the price, whatever the price would have been it will automatically be 25% less. If supply and demand dictate that the price would be $10 per bushel, they'll be $7.50. If supply & demand dictates the price would be $12, they'll be $9.
Why do I say this? Because the Chinese are going to pay whatever the market price would have been minus the 25% they'll pay in tariffs. In the end, they'll buy all the US soybeans they need and they won't pay a dime more than they would have whatever the natural price would have been.
So when you're selling your beans for $7.50 a bushel, just remember, in effect you'll be paying the Chinese government $2.50 per bushel for the privilege. And worse yet, you'll be selling the other 60% of your beans to your other customers for the same $7.50 per bushel. Either that or your beans will be sitting in a bin someplace unsold. | |
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I've been reading thru...
