After China unveiled steep retaliatory tariffs on American exports on Wednesday, Treasury Secretary Scott Bessent issued a sharp and somewhat surprising response: “So what?”
The question underscored the Trump administration’s argument that America has the upper hand in a trade war with China given how reliant its economy is on exports to the United States.
The United States buys far more goods from China than China buys from the United States. But Beijing’s decision to retaliate against President Trump’s punishing tariffs by raising levies on American imports to 84 percent could sting more than Mr. Bessent let on.
“American companies that have been selling to China, and have been enormously successful doing that, are not going to be able to do that because of Chinese retaliation,” Sean Stein, the president of the U.S.-China Business Council, said in the hours before Mr. Trump ratcheted up his tariffs again.
“Tariffs on the Chinese side and the U.S. side cover everything,” Mr. Stein added, meaning everything from aviation to medical imaging to agriculture would be affected and “trade is going to slow,” he said.
The United States exported $143.5 billion of goods to China last year and imported $438.9 billion from that country, according to the Office of the United States Trade Representative.
The loss of China as an export market will deal a particularly hard economic blow to agricultural workers in many red states, hitting many of the voters who helped Mr. Trump win the presidential election. On Wednesday, Mr. Trump ratcheted U.S. tariffs on China even higher as he initiated a pause on “reciprocal” tariffs that he had imposed on other countries. The reprieve offers little relief for farmers who are concerned that a protracted trade war with China will cut off ties with their largest export market.
The first trade war with China, which lasted from 2018 to 2019, resulted in billions of dollars of lost revenue for American farmers. To help offset the losses, Mr. Trump handed out $23 billion in subsidies from a fund that the Department of Agriculture created to stabilize the farm sector. Large farm operations and farmers in the South benefited the most, fueling concerns about fairness and leaving some farmers feeling cheated.
The soybean industry is one of the sectors most concerned about the current tariff retaliation. China is America’s largest soybean export market, but when Mr. Trump imposed tariffs on Chinese goods during his first term, Beijing retaliated by buying soybeans from other countries, including Brazil.
“If this lasts long term, we’re going to have a significant number of farmers going out of business,” said Caleb Ragland, a Kentucky farmer who is president of the American Soybean Association. “We still bear scars from the last trade war.”
The American Soybean Association has been urging the Trump administration to strike a new trade deal with China to avoid a long-term trade war.
U.S. corn farmers, who sell about 2 percent of their products to China, have also been on edge about the trade fight. They welcomed Mr. Trump’s decision to pause punishing tariffs on other countries that could have led to more retaliation on farmers and other American businesses. But they urged the Trump administration to focus on negotiations that open up market access.
“The longer that uncertainty exists, the more concerned we become that our growers could harvest billions of bushels of corn for which they will not have reliable markets,” said Kenneth Hartman Jr., president of the National Corn Growers Association. “Our farmers want certainty that our customers at home and abroad will buy our products in the months and years ahead.”
Anxiety over the impact of the tariffs was evident on Wednesday as Jamieson Greer, the U.S. trade representative, testified before the House Ways and Means Committee and faced questions from Republicans who were nervous about retaliation from other countries against U.S. farm exports.
Representative Darin LaHood, a Republican from Illinois, said that he appreciated what Mr. Trump was doing to address longstanding trade barriers, but that his constituents were concerned.
“As I talk to my farmers, there’s a lot of anxiety, a lot of stress, a lot of uncertainty, because when we get into a trade war, usually the first pawn in the trade war is agriculture,” he said.
Mr. Greer responded that “almost all countries have announced that they’re not going to retaliate” except for China. Indonesia, India and many other countries “have affirmatively said we’re not retaliating,” he added, while some countries, like Vietnam, have unilaterally offered to lower tariffs on U.S. farm products. Mr. Greer did not mention that Europe announced retaliatory measures on Wednesday or that Canada had retaliated against previous rounds of tariffs.
Mr. Bessent downplayed the impact of China’s response on Wednesday morning, arguing on the Fox Business Network that the United States exports relatively little to China.
“China can raise their tariffs, but so what?” said Mr. Bessent, who owns as much as $25 million of North Dakota farmland that he must divest.
The retaliation could force the Trump administration to revive the bailouts to American farmers that were offered during the president’s first term.
Brooke Rollins, the agriculture secretary, said on Wednesday that such a relief package was being considered and that “everything is on the table.”
At a White House cabinet meeting on Thursday, Ms. Rollins noted that farmers and ranchers had been struggling because of inflation and were concerned about uncertainty over trade but that they supported Mr. Trump’s economic agenda.
“Your idea of using tariffs to ensure that we are putting forward and putting America first, no one understands that better than our farmers and our ranchers,” Ms. Rollins said. “The period of uncertainty that we’re in, they know that your vision will move us into an age of prosperity.”
Mr. Trump offered little clarity on Thursday about a truce with China, but the president expressed general optimism about the economic relationship.
Asked about the potential for a deal with China, Mr. Trump said he expected that “we’ll end up working out something that’s very good for both countries.”
The president initially hailed the trade deal that he reached with China during his first term as a success, but China ultimately failed to honor promises it had made to buy large quantities of American farm products. Meanwhile, almost all of the tariff proceeds the United States collected during that trade war were used to provide relief to the agriculture industry.
Farmers generally resist government handouts, but Mr. Ragland of the American Soybean Association said federal relief might be necessary in this case.
“If we continue to be used as a negotiating tool, and we’re going to be a sacrificial lamb on behalf of the bigger picture, we’re going to have to have an economic package to help us keep the lights on,” he said.
Tony Romm contributed reporting