2,543 words, 13 minutes read time
Another major counterattack has started today!
Look at these pieces of news—they are all connected.
First, on the 3rd, local time, at the White House, Trump, with a relaxed and carefree expression, publicly announced that the U.S. would impose a 25% tariff on Mexico and Canada, effective on the 4th!
Then, Canada didn’t back down this time. They quickly responded with a tough stance, saying they were “ready to retaliate immediately!”
The Prime Minister’s Office announced that once the U.S. tariffs take effect, Canada would “immediately impose” equivalent tariffs on the first batch of U.S. imports worth 30 billion Canadian dollars!
What about Mexico?
As we’ve mentioned before, Mexico’s economic situation can’t be compared to Canada’s, but its attitude is equally firm. Mexican President Claudia Sheinbaum also publicly declared that no matter what decision Trump makes, she will announce “Plan B, C, and D” on Tuesday!
Why start directly with “Plan B”? It’s not entirely clear.
And what about China?
China has also taken action, announcing a 15% tariff on U.S. chicken, wheat, corn, and cotton, and a 10% tariff on U.S. sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products!
Additionally, China has added 15 U.S. arms companies to the export control list.
If you just look at these news items, many people might not think much of it. Some even say today that China exports to the U.S. are still over $600 billion, while U.S. exports to China are only $160 billion. The difference is so large that it’s hard to find leverage!
The general idea is that in a trade war, the country with a trade surplus is at a natural disadvantage.
But is that really the case?
Let me start with a story from my school days. I was in middle school in the early 1990s. To be honest, people were much poorer back then. Many things that people now consider serious, like school bullying, weren’t even a big deal back then. In fact, there was hardly any awareness of it.
So what did we do?
The unwritten rule back then was pretty much “fight back.” For example, once on my way home, four classmates blocked my bicycle from the front, back, and left, trying to push me into a ditch on the right. The slope of the ditch was covered with thorns, and if I had been pushed in, I would have been covered in cuts. Fortunately, I was strong enough to kick three of them into the ditch, and the fourth ran away.
Even though I was strong, I still got bullied. But among my classmates, there was one exception. He was a late bloomer, small and skinny, probably only about 1.45 meters tall, and not very strong. Yet, no one dared to bully him.
Why?
Because even if a taller, stronger classmate tried to bully him, he would suddenly strike certain parts of their body with just a light touch, causing them to go numb and feel a sharp pain that wouldn’t go away for hours.
How did he do it?
According to him, it was by accident. Once, he lightly touched a tree with his elbow and suddenly felt half of his body go numb, unable to move for a long time.
Since he was often bullied due to his weak physique, he started experimenting with his body whenever he had time. Eventually, he discovered several special points. No matter how strong someone was, if they tried to bully him, they would suffer. So everyone was afraid of him, let alone provoking him.
He even taught me, but I couldn’t do it. He could make my body go numb with just a light touch, but when I tried the same on others, it didn’t work. To this day, I don’t know why he could do it, and I couldn’t.
Why am I bringing up this old story?
Actually, it’s because of what some people are saying today—that China exports to the U.S. are $600 billion, while U.S. exports to China are only $160 billion. Combined with China countermeasures, it suddenly reminded me of this old story.
Do you really think that having a larger export volume means we’re at a disadvantage?
Not at all!
Why do I say that?
Here’s the key point: China countermeasures this time are primarily targeting U.S. agricultural products!
In fact, many days ago, when the U.S. announced a 10% tariff on China, I mentioned in my public account that if the U.S. didn’t back down, China next move would likely target their agricultural products!
Why?
Because China move is a bit like my classmate back then. It may seem unremarkable, but it’s actually quite powerful! This brings us to the super dark humor in the trade structure between the U.S. and China: The U.S., which claims to be the most economically developed country with the highest GDP, actually has very few things it can offer China. Its biggest advantage is agricultural products, along with energy!
It’s almost like a developing country!
I’ve mentioned before that the U.S. doesn’t have great natural conditions for agriculture, but it relies on large-scale government subsidies and systematic, modernized production to achieve high efficiency and strong competitiveness. Products like rapeseed, soybeans, and grains have higher export volumes than semiconductors, shale oil, and shale gas, which the U.S. often boasts about!
These products are mainly for consumption!
But Americans can’t consume all of it, so they have to export it!
In the first three quarters of last year alone, U.S. agricultural exports reached $130 billion!
So, looking at the global market, which country is the most ideal market for U.S. agricultural products?
It’s definitely China!
After all, China has 1.4 billion mouths to feed, and Chinese take eating very seriously!
India also has 1.4 billion mouths, but given its economic situation, its consumption capacity in this area probably isn’t up to par.
For example, on February 26th of this year, just about a week ago, the Indian government held a high-end investor summit attended by many wealthy individuals.
But when it came time for the buffet, the scene was chaotic. People acted like they hadn’t eaten in centuries, pushing and shoving, frantically grabbing food, and even knocking down the restaurant’s decorations and temporary arches!
The scene became a global joke!
If even the wealthy act like this during meals, how much U.S. agricultural products can those 1.4 billion mouths import?
From this, it’s clear that the most promising target market for U.S. agricultural exports should be China!
But in recent years, the U.S. has been causing trouble for itself by engaging in a trade war with China, and the result is that others benefit!
For example, in 2022, China imported 14.86 million tons of U.S. corn, but in 2023, it dropped to 7.14 million tons, and in 2024, it’s only 2.0726 million tons. The situation with soybeans is similar!
There’s another product China imports quite a bit of: sorghum.
In 2024, China imported a total of 8.657 million tons, with 5.683 million tons coming from the U.S., accounting for 65.65% of the total. The rest came from Australia and Argentina.
But why wasn’t this mentioned before?
Because although sorghum is a food crop, it contains tannins, which affect animals’ nutrient absorption, so it’s usually used for brewing rather than as feed!
After this introduction, some might think: Most of Trump’s supporters come from agricultural states. By targeting U.S. agricultural products, China is hurting the interests of his supporters, which could hurt the Republican Party. It’s like “hitting the snake at its vital spot!”
This is correct.
But this matter is far more complicated! Behind it lies a very powerful “combination punch” that, if successful, could leave Trump spitting blood!
What kind of combination punch is this?
Let’s go back to more than 20 days ago. When Trump announced a 10% tariff on China, China announced countermeasures, one of which was a 10% tariff on U.S. agricultural machinery!
Why is this worth noting?
Because as the world’s largest agricultural market, China demand for agricultural machinery has always been huge. U.S. agricultural machinery, with its advanced technology and good performance, has always held a significant share in our market.
But due to the large domestic market, China agricultural machinery industry has rapidly risen in recent years, competing with U.S. companies for international market share. For example, last year, China agricultural machinery export value increased by $1.387 billion compared to 2023, reaching $7.162 billion, a year-on-year increase of 24.1%!
At this point, a “super combination punch” has formed.
After China imposes tariffs on U.S. agricultural products, their prices will rise, and their competitiveness in the Chinese market will significantly decline. Who will benefit from this?
Australia;
Russia;
Argentina;
Brazil.
Previously, even if China demand was high, they would still buy U.S. agricultural machinery for production.
But now?
China agricultural machinery industry has also risen, offering good quality at low prices. Will China take away some of the U.S. market share?
Moreover, since their agricultural products’ main target market is still China, isn’t it more natural to purchase China agricultural machinery?
At this point, many should have figured out what this “combination punch” is:
The first punch: China announced a 10% tariff on U.S. agricultural machinery on February 10th. With low profit margins in manufacturing, many U.S. agricultural machinery companies will lose a significant portion of the market in the future.
The second punch today includes two moves:
One move is that after tariffs are imposed, the competitiveness of U.S. agricultural products will significantly decline, and their market will be divided among many countries, causing significant losses to U.S. farmers.
The other move is: When U.S. farmers see poor export prospects, will they still buy U.S. agricultural machinery as usual?
Of course not!
After all, these machines are quite expensive, and they need a stable market to justify the purchase.
The third punch will soon appear: China agricultural machinery companies will not only take over the U.S. domestic market but, due to their rapid development, will also go global to compete for the U.S. agricultural market.
You’ve sold so many agricultural products to China; isn’t it fair to buy some of our high-quality agricultural machinery?
After this combination punch, what will happen to the U.S. agricultural machinery industry?
The Chinese market, a very lucrative one, will no longer be a priority!
Your Trump has already dug enough holes for you!
The U.S. domestic market will also shrink due to China countermeasures today.
As for other countries’ markets?
Sorry, China domestic agricultural machinery companies will compete with US for those markets.
Attacked from three sides!
Surrounded on all fronts!
At this point, some might ask: You’ve been talking about the U.S. agricultural machinery industry, but the U.S. is a big country, and this industry doesn’t seem that large. Shouldn’t it have much impact on Trump?
If you think that, you’re wrong!
Because the distribution of U.S. agricultural machinery companies is very peculiar—most are in swing states!
Those who have followed U.S. elections know that among the swing states, there’s one called Georgia.
Trump and Harris have invested heavily there, fighting several major battles.
In Georgia, there’s a well-known agricultural machinery company called AGCO!
It’s ranked third globally.
Even agricultural machinery companies not headquartered in swing states will be affected because many of their production bases are in swing states.
For example, John Deere, the world’s top agricultural company, is headquartered in the traditionally blue state of Illinois, but many of its production bases are in Iowa, a traditionally Republican state.
There’s also Case New Holland in Indiana.
What impact will China combination punch have?
The answer is: The 2026 U.S. midterm elections, when both the Senate and the House of Representatives will be up for re-election.
For example, AGCO’s headquarters are in Georgia’s 7th Congressional District, which has been redistricted. Although its federal representative is still a Democrat, it could change in the 2026 midterm elections.
But AGCO is a big company with many employees in this district.
The difference between the Republican and Democratic parties is already small. A slight push could change things. If AGCO is dragged down by Trump’s actions, who will the voters blame? Which side will they vote for in the midterm elections?
John Deere’s headquarters are in Rock Island County, Illinois, which is part of the state’s 17th Congressional District. The current representative is Eric Sorensen, one of the Republican Party and Trump’s staunch opponents.
The U.S. has always been a country where politics and business are intertwined. If John Deere’s business is significantly affected and the locals feel the impact, who will benefit in the 2026 midterm elections?
I’ve only mentioned a few well-known companies here. The U.S. agricultural machinery industry is actually quite large, with a total output value of over $100 billion. Just think about the impact China “combination punch” will have on the U.S. midterm elections.
It will indirectly hit some of Trump’s voters!
And the behind-the-scenes financial backers of the representatives!
Remember, the U.S. House of Representatives is currently controlled by the Republican Party, but the seat ratio is 218 Republicans to 215 Democrats, a difference of only 3 seats. A slight change in the external environment could flip it!
The Senate is in a similar situation!
A slight change could flip it!
Don’t forget, in 2017, during Trump’s first term, both houses of Congress were controlled by the Republican Party, with an even larger advantage in the House: 241 Republicans to 194 Democrats out of 435 seats.
But after the midterm elections, the situation changed dramatically, and Trump became a lame duck!
Interestingly, in last year’s House elections, the main districts where Democrats lost, such as Michigan’s 7th District, two districts in Pennsylvania, one in North Carolina, and one in Colorado, all had relatively large agricultural machinery companies, and the losses were by narrow margins!
Isn’t this precision targeting?
At this point, after reading this news, do you also feel the same way I do? It immediately reminds me of my skinny middle school classmate, who, after accidentally touching a tree with his elbow, taught himself a method to make even the strongest classmates flee at the sight of him.
This is the power of mystery!
Who says that in a trade war, the country with a trade surplus is necessarily at a disadvantage?
Moreover, don’t underestimate Canada—it also has its own killer move: energy!
I’ve mentioned before that U.S. refineries can’t process shale oil, so they have to import crude oil, 65% of which comes from Canada. Additionally, many northern U.S. regions rely on Canadian electricity, with Ontario’s power supplying 1.5 million U.S. households!
The U.S. is a country built on wheels. If Trump’s tariffs cause U.S. gasoline prices to skyrocket, what will happen?
What about Mexico?
It may seem weak, but why don’t Americans think about this: If you could still develop manufacturing, why has your trade deficit continued to increase despite imposing heavy tariffs in recent years?
What’s the deal?
It’s not that simple!
Right now, the U.S. has almost no cards to play except tariffs, but it’s addicted to them. China, on the other hand, has a lot of good cards. So let’s play and see who laughs last!
