WICHITA, Kan. (KWCH) The United States stock market fell early Wednesday only to recover into the positive by the close.
China tariff graphic by MGN.
The fluctuation is in response to a proposed $50 billion in Chinese tariffs on U.S. goods, raising fears of a global trade war.
"A tariff is just one of the tools countries use when they are coming to trade issues and that's what's happening right now," says economist Jeremy Hill, director for the Center for Economic Development and Business Research at Wichita State University.
Hill says the tariffs cause a protectionist mentality at the U.S. level and nationally. That mentality could decrease competition in the global market and increase prices.
"Most economists would say that if we do go into a trade war it's not going to end well, especially for the United States," says Hill. "It's not a healthy thing for an open market which we have."
He says the tariffs are an aggressive negotiation tactic, but he also notes that there is no need to worry about a trade war yet.
"This is getting the markets upset, but this hasn't really implemented anything yet," he says.
Some major industries in Kansas that could be affected by the tariffs include agriculture and aerospace.
"It makes a big difference on the price of an airplane if there's a tariff on it," explains Brian Middleton, President or Aero-Spaces LLC and D&O Engineering.
Middleton adds that the aerospace industry is relatively stable. Boeing, one of the biggest companies to face direct effects, has a five to seven-year backlog on their single-aisle aircraft.
According to Hill, only 1.7% of Kansas's aircraft exports go to China.
"It will take a long time for any reduction quantities to affect anybody here in town, but it will affect them," says Middleton.
Kansas farmers could also see effects.
Soybeans, wheat, and corn are all on China's list of American goods that could face a 25% tariff.
Max Tjaden has spent the last 36 years growing these crops at his farm just outside of Clearwater.
Kansas exported more than 400-million dollars worth of soybeans to China last year.
Soybeans are Tjaden's most profitable crop.
"You don't see soybeans piled sup anywhere usually it continues to move out of the country to the right locations," Tjaden says.
Tjaden believes China will still buy the commodity from the U.S. even if tariffs are implemented.
"China uses a lot of soybeans and they need soybeans and want soybeans, and there's only so much soybeans in the world they're going to get," says Tjaden.
Tjaden says Kansas farmers could see losses with other crops like wheat and corn.
With upwards of 50% of Kansas' wheat exported each year, a possible effect of the tariffs could mean an increase in stockpiling of the crop with fewer options of where to export it to if China decides to purchase it from other countries.
Tjaden says he is hopeful both countries will talk and come up with a better solution.
"Time will tell, I don't think it'll take too much time to see where things go," says Tjaden.