“In peacetime, Ukraine’s food exports were enough to feed 400 million people. Its farmers supplied a tenth of the wheat and half the sunflower oil sold on world markets. Its shipments of grains and oilseeds through the Black Sea fell to zero last March, from 5.7 million metric tons in February.
For net importers the impact was immediate and direct. Egypt and Libya had imported two-thirds of their cereals from Russia and Ukraine, for instance. Other countries were hit by the fallout: Prices shot up, first in response to the invasion, and again as countries like India imposed bans on grain exports.
“One of the cruelest ways in which Putin has used the weapons of war to impose costs on people around the world is the ways in which his early blockade of Black Sea ports raised prices for hungry people in dozens of countries around the world,” Sen. Chris Coons (D-Del.), a close ally of President Joe Biden and who serves on the Foreign Relations Committee, said in an interview.
Coons noted the U.N., Turkey and Ukraine’s work to forge the Black Sea grain deal has reduced some of the overwhelming strain on global food prices, “but not enough yet.”
In Ukraine, farmers could not sell their crops after a bumper harvest before the war left grain stores brimming. The next harvest, already in the ground, had nowhere to go, said Joseph Glauber, a senior research fellow at the International Food Policy Research Institute and former chief economist at the U.S. Department of Agriculture.
The standstill to exports also endangered the home front. Before the war, almost half of the country’s budget stemmed from exports, and nearly half of those exports were agricultural, according to Dmytro Los of the Ukrainian Business and Trade Association. “So don’t forget that, during the war, we lost almost 45-50 percent of GDP,” Los said.
To stave off starvation abroad and rescue Ukrainian farmers, the EU set up overland “solidarity lanes” to help bring food exports out through Eastern Europe. And, in July, the U.N. and Turkey mediated the deal to allow safe passage for Ukrainian food shipments through the Black Sea.
Some 21.5 million tons of Ukrainian produce have been transported under the initiative, enabling the World Food Programme to deliver valuable aid to countries like Ethiopia and Afghanistan.
This has helped ease some of the pressure on global food prices — although they remain high — while ensuring Ukraine’s agriculture sector, a leading driver of its economy, doesn’t collapse.
“It’s very important for Ukraine, but it is even more important for the world,” said Oleksiy Goncharenko, a Ukrainian MP who represents Odesa — one of the few ports covered under the current agreement.
As talks resume this week, the fate of the grain deal hangs in the balance. Both sides have plenty of gripes.”
“Even on the day two years ago that the trade deal was inked, there was skepticism that China would live up to its pledge to spend $200 billion more on U.S. goods and services.
But a new study finds China didn’t even spend an additional dime on U.S. products.”
“China agreed to buy at least $227.9 billion of U.S. exports in 2020 and $274.5 billion in 2021, for a total of $502.4 billion over the pact’s two years, he noted. In reality: U.S. exports of covered goods and services to China over the two years totaled $288.8 billion.”
“China had become the second-largest export market for American-made cars by 2017, the last full year before Trump’s trade war began. After a series of tit-for-tat tariff increases between the U.S. and China, however, American automotive exports to China fell by more than one-third. Higher tariffs on imported car parts from China raised costs for automakers in America, while China’s retaliatory tariffs on American-made cars hiked prices and reduced demand in China.
To avoid those costs and to evade increased uncertainty, some carmakers began shifting their supply chains—but not in the direction the White House was hoping.
BMW, for example, shifted much of the production of its X3 sport-utility vehicle from Spartanburg, South Carolina, to China after reporting that tariffs had cut the company’s American profits by about $338 million in 2018. The higher costs imposed by the trade war caused Tesla to announce that it was “accelerating construction” of a new plant in Shanghai.
Overall, the number of American automating jobs peaked in September 2018, shortly after Trump’s trade war began, and then declined during 2019 and 2020.
The signing of the “phase one” trade deal with China did little to stop or reverse those shifts. Even though China pledged to increase its purchases of American-made vehicles and car parts as part of the agreement, exports are still lagging well behind their pre-trade war totals, according to the PIIE report.”
“Trump believed that hiking tariffs would reduce America’s imports from China, allowing the gap between the value of those imports and the value of America’s exports to fall. What he failed to grasp, however, is that many of those imports—especially when it comes to manufactured goods—are materials necessary for making the items that American companies end up exporting back to China: like cars.
Higher costs imposed on imports ended up slowing American exports—and thus the trade deficit actually grew. Meanwhile, companies could avoid the cost of Trump’s tariffs by shifting production out of the United States, and some chose to do that.
Biden, so far, seems unwilling to remove Trump’s tariffs. By announcing a misguided “Buy American” policy for government procurement, Biden is also expanding on some of the Trump administration’s protectionist manufacturing policies.
If the past few years are any indication, all Biden will likely accomplish by this is to further erode America’s industrial base by trading away automaking jobs in exchange for the appearance of “toughness.””