LUBBOCK, TX (KCBD) - Although Tuesday's speech by Chinese President Xi Jinping eased some concerns about a looming trade war between the United States and China, there is still a major risk for many West Texas farmers.
"The latest list from China said they were going to impose a 25 percent tariff on about 100 U.S. goods. Of most relevance for us here in West Texas: cotton was on that list, sorghum was on that list, beef was on that list."
Benjamin Powell, Economics Professor and Director of the Free Market Institute at Texas Tech, told KCBD:
"Tariffs are almost always, and universally, a bad idea. They distort the relative prices that coordinate our economic activity. As a result, goods look more or less scarce than they really are, and producers change how they produce things."
One of the industries that would take the biggest hit from these proposed tariffs would be the sorghum industry. Texas, as a state, provides 25 percent of the nation's sorghum.
Tim Lust, CEO of the National Sorghum Producers, says the industry is already seeing an impact.
"When we look at the U.S. sorghum industry, we're sending about 70 percent of our product this year to China."
Lust says that sorghum providers have began looking for other countries to sell to if these tensions with China do re-escalate, but he says that this is about much more than just the sorghum industry.
"Our mission really is the two largest governments and economies in the world need to sit down and negotiate this out. This is not about sorghum, it's not about West Texas, this is about some significant other trade issues. Our governments need to sit down and work that out. Certainly that is the best outcome for our growers, for West Texas, and for America."