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Why politicians are obsessed with mythical Chinese land grabs

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There was a time when Kim Reynolds, the governor of Iowa, had no problem with Chinese investment. In 2012, when she was the state’s lieutenant governor, she met Xi Jinping, then China’s vice-premier, on a visit to Beijing. In 2017, as governor, she visited again, this time posing with Vice-Premier Wang Yang. No longer. In her Condition of the State address to Iowa’s legislature on January 9th, Ms Reynolds claimed that “China continues to grow more aggressive, and buying American land has been one of the many ways they have waged this new battle.” Later this year she intends to introduce a new law that would toughen land-ownership reporting rules in Iowa. “American farmland should stay in American hands,” she says.

Ms Reynolds joins a chorus of state and federal politicians who worry about Chinese land grabs. On January 2nd Missouri’s governor, Mike Parson, issued an executive order banning “foreign adversaries” from buying land within ten miles of a military facility. Last October Arkansas ordered a Chinese-owned agricultural firm to sell 160 acres of land. Laws to restrict Chinese ownership of land have spread to Florida and Texas. In recent years the number of states with restrictions on foreign ownership has grown from 14 to 24, according to Micah Brown, of the National Agricultural Law Centre in Arkansas. Federal politicians are getting in on the act, too. Jon Tester, the Democratic senator from Montana, is among those to have proposed tighter federal laws on foreign land ownership.

Yet there is little reason to think that Chinese firms are really buying much American land—whether near military bases or otherwise. If official data are to be believed, Chinese landholdings are both tiny and shrinking. Chinese investment into America has collapsed in the past few years. Is it all a storm about nothing?

Since 1978 foreign owners of agricultural land have been required to declare it to the US Department of Agriculture (USDA). The agency’s data show that, at the end of 2022, around 3% of privately held land nationwide was declared foreign-owned. The biggest holders were firms and individuals from Canada, followed by the Netherlands and Britain. Declared Chinese entities held less than 1% of all foreign-owned land, or 0.03% of the total. People in Luxembourg own more. Foreign land ownership has grown by 40% since 2016, but China is not evidently the driver. From 2021 to 2022 the total amount of land owned in full or in part by Chinese firms shrank from 384,000 acres to 347,000. In Iowa, Chinese holdings totalled just 281 acres—an area smaller than the state fairgrounds in Des Moines.

So why the panic? Mr Brown says that the surge of lawmaking is driven by a change in the political climate, caused by two relatively high-profile incidents of Chinese land purchases near military bases. One was for a grain-milling plant in North Dakota, a few miles away from Grand Forks Air Force Base. The other was land purchased to build a wind farm in southern Texas, near Laughlin Air Force base. Those, combined with the shooting down of a Chinese spy balloon last year, meant that: “Nobody wanted to stand up against restricting [Chinese] purchases of land,” says Mr Brown. Politicians of various stripes have suggested that the Chinese either want to spy, or to control America’s food supply, or both.

The patchiness of official data does not help. That 281 acres in Iowa is owned by Syngenta, an agricultural-science firm. The firm was purchased outright by ChemChina, a state-owned chemicals firm, in 2017. But until 2021 the land was listed as Swiss-owned in the USDA records—as were several other Syngenta sites. Late last year, tax records revealed that Chen Tianqiao, a Chinese billionaire with past links to the Communist Party, who lives in the San Francisco Bay Area, owns almost 200,000 acres of forestry land in Oregon, which was not declared as foreign-owned. (Mr Chen’s firm now says that, following media questions, it has submitted the relevant USDA filings.) A review by the Government Accountability Office published on January 18th found that the Treasury and Defence departments need timelier and more accurate data to judge security risks.

Still, it is unlikely that data gaps hide a surge of secret Chinese purchases. Overall Chinese investment into America peaked in 2016, and has fallen off a cliff since the pandemic, says Derek Scissors, who maintains a database of Chinese foreign investment for the American Enterprise Institute, a think-tank. What investment is continuing is generally confined to the supply chain for electric vehicles. The flood of Chinese land purchases that began a decade or so ago was more to do with wealthy Chinese people trying to get their money out of China than about spying, according to Mr Scissors. The new laws are a bit like ones “preventing snow emergencies in Florida”, he says. That is to say, pointless.

From California to the New York island

Some politicians are frustrated with the endless focus on land. Raja Krishnamoorthi, a Democratic congressman who is the ranking member of the House select committee on China, admits that enforcement of filing requirements for USDA’s database is “pretty lax”. But some laws intended to stop any Chinese-origin individuals buying any land at all, such as one passed in Florida last year that restricted even residential-property purchases, drift into “outright racism and xenophobia”, he complains. He wishes politicians would focus more on improving American competitiveness in general. Sadly that is harder than blustering about farmland.

Correction (January 23rd 2024): This article was updated to note that Chen Tianqiao no longer has links to the Chinese Communist Party.

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Economics

U.S. tariff rates under Trump will be higher than the Smoot-Hawley levels from Great Depression era

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U.S. President Donald Trump holds a chart next to U.S. Secretary of Commerce Howard Lutnick as Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., on April 2, 2025.

Carlos Barria | Reuters

The tariff policy outlined by President Donald Trump on Wednesday appears set to raise the level of U.S. import duties to the highest in more than 100 years.

The U.S. introduced a baseline 10% tariff on imports, but also steep country-by-country rates on some major trading partners, including China. The country-by-country rates appear to be related to the trade deficit the U.S. has with each trading partner.

Sarah Bianchi, Evercore ISI chief strategist of international political affairs and public policy, said in a note to clients late Wednesday that the new policies put the effective tariff rate above the level of around 20% set by 1930’s Smoot-Hawley Tariff Act, which is often cited by economists as a contributing factor to the Great Depression.

“A very tough and more bearish announcement that pushes the overall U.S. weighted average tariff rate to 24%, the highest in over 100 years – and likely headed to as high as 27% once anticipated 232s are complete,” Bianchi wrote. The “232s” is a reference to some sector-specific tariffs that could be added soon.

JPMorgan’s chief U.S. economist Michael Feroli came up with similar results when his team crunched the numbers.

“By our calculations this takes the average effective tariff rate from what had been prior to today’s announcement around 10% to just over 23%. … A White House official mentioned that other section 232 tariffs (e.g. chips, pharma, critical minerals) are still in the works, so the average effective rate could go even higher. Moreover, the executive order states that retaliation by US trading partners could result in even higher US tariffs,” Feroli said in a note to clients.

More downside risk for the economy going forward, says Apollo Global's Torsten Slok

An estimate from Fitch Ratings was in the same range, with a report saying the tariff rate would hit its highest level since 1909.

Trump referenced the Smoot-Hawley Act in his Rose Garden remarks on Wednesday. The president said the issue was not the tariffs imposed in 1930 but the previous decision to remove the higher tariffs that existed earlier in the 20th century.

“It would have never happened if they had stayed with the tariff policy. It would have been a much different story. They tried to bring back tariffs to save our country, but it was gone. It was gone. It was too late,” Trump said.

The full economic impact of the new tariffs will likely depend on how long they are in place and if other countries retaliate. Trump and Treasury Secretary Scott Bessent have indicated that the country-by-country tariffs could come down if those trade partners change their policies.

JPMorgan global economist Nora Szentivanyi warned that Trump’s tariffs were likely to push the U.S. and global economy into a recession this year if they are sustained.

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Economics

The Federal Reserve is not likely to rescue markets and economy from tariff turmoil anytime soon

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U.S. Federal Reserve Chair Jerome Powell and U.S. President Donald Trump.

Craig Hudson | Evelyn Hockstein | Reuters

Now that President Donald Trump has set out his landmark tariff plans, the Federal Reserve finds itself in a potential policy box to choose between fighting inflation, boosting growth — or simply avoiding the fray and letting events take their course without intervention.

Should the president hold fast to his tougher-than-expected trade policy, there’s a material risk of at least near-term costs, namely the potential for higher prices and a slowdown in growth that could turn into a recession.

For the Fed, that presents a potential no-win situation.

The central bank is tasked with using its policy levers to ensure full employment and low prices, the so-called dual mandate of which policymakers speak. If tariffs present challenges to both, choosing whether to ease to support growth or tighten to fight inflation won’t be easy, as each courts its own peril.

“The problem for the Fed is that they’re going to have to be very reactive,” said Jonathan Pingle, chief U.S. economist at UBS. “They’re going to be watching prices rise, which might make them hesitant to respond to any growth weakness that materializes. I think it’s certainly going to make it very hard for them to be preemptive.”

Under normal conditions, the Fed likes to get ahead of things.

If it sees leading gauges of unemployment perk up, the Fed will cut interest rates to ease financial conditions and give companies more incentive to hire. If it sniffs out a coming rise in inflation, it can raise rates to dampen demand and bring down prices.

So what happens when both things occur at the same time?

Risks to waiting

The Fed hasn’t had to answer that question since the early 1980s, when then-Chair Paul Volcker, faced with such stagflation, chose to uphold the inflation side of the mandate and hike rates dramatically, tilting the economy into a recession.

In the current case, the choice will be tough, particularly coming on the heels of how the Jerome Powell-led central bank was flat-footed when prices started rising in 2021 and he and his colleagues dismissed the move as “transitory.” The word has been resurrected to describe the Fed’s general view on tariff-induced price increases.

“They do risk getting caught offsides with the potential magnitude of this kind of price increase, not unlike what happened in 2022 where, they might might feel the need to respond,” Pingle said. “In order for them to respond to weakening growth, they’re really going to have to wait until the growth does weaken and makes the case for them to move.”

To be sure, the Trump administration sees the tariffs as pro-growth and anti-inflation, though officials have acknowledged the potential for some bumpiness ahead.

“It’s time to change the rules and make the rules be stacked fairly with the United States of America,” Commerce Secretary Howard Lutnick told CNBC in a Thursday interview. ” We need to stop supporting the rest of the world and start supporting American workers.”

However, that could take some time as even Lutnick acknowledged that the administration is seeking a “re-ordering” of the global economic landscape.

Like many other Wall Street economists, Pingle spent the time since Trump announced the new tariffs Wednesday adapting forecasts for the potential impact.

Bracing for inflation and flat growth

The general consensus is that unless the duties are negotiated lower, they will take prospects for economic growth down to near-zero or perhaps even into recession, while putting core inflation in 2025 north of 3% and, according to some forecasts, as high as 5%. With the Fed targeting inflation at 2%, that’s a wide miss for its own policy objective.

“With price stability still not fully achieved, and tariffs threatening to push prices higher, policymakers may not be able to provide as much monetary support as the growth picture requires, and could even bind them from cutting rates at all,” wrote Seema Shah, chief global strategist at Principal Asset Management.

Traders, however, ramped up their bets that the Fed will act to boost growth rather than fight inflation.

As is often the reaction during a market wipeout like Thursday’s, the market raised the implied odds that the Fed will cut aggressively this year, going so far as to put the equivalent of four quarter-percentage-point reductions in play, according to the CME Group’s FedWatch tracker of futures pricing.

Shah, however, noted that “the path to easing has become narrower and more uncertain.”

Fed officials certainly haven’t provided any fodder for the notion of rate cuts anytime soon.

In a speech Thursday, Vice Chair Philip Jefferson stuck to the Fed’s recent script, insisting “there is no need to be in a hurry to make further policy rate adjustments. The current policy stance is well positioned to deal with the risks and uncertainties that we face in pursuing both sides of our dual mandate.”

Taking the cautious tone a step further, Governor Adriana Kugler said Wednesday afternoon — at the same time Trump was delivering his tariff presentation in the Rose Garden — that she expects the Fed to stay put until things clear up.

“I will support maintaining the current policy rate for as long as these upside risks to inflation continue, while economic activity and employment remain stable,” Kugler said, adding she “strongly supported” the decision in March to keep the Fed’s benchmark rate unchanged.

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Economics

Layoff announcements surge to the most since the pandemic as Musk’s DOGE slices Federal labor force

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Employees of the Department of Health and Human Services (HHS) hug each other as they queue outside the Mary E. Switzer Memorial Building, after it was reported that the Trump administration fired staff at the Centers for Disease Control and Prevention and at the Food and Drug Administration, as it embarked on its plan to cut 10,000 jobs at HHS, in Washington, D.C., U.S., April 1, 2025. 

Kevin Lamarque | Reuters

A surge in federal government job cuts contributed to a near record-setting pace for announced layoffs in March, exceeded only by when the country shut down in 2020 for the Covid pandemic, according to a report Thursday from job placement firm Challenger, Gray & Christmas.

Furloughs in the federal government totaled 216,215 for the month, part of a total 275,240 reductions overall in the labor force. Some 280,253 layoffs across 27 agencies in the past two months have been linked to the Elon Musk-led Department of Government Efficiency and its efforts to pare down the federal workforce.

The monthly total was surpassed only by April and May of 2020 in the early days of the pandemic when employers announced combined reductions of more than 1 million, according to Challenger records going back to 1989.

“Job cut announcements were dominated last month by Department of Government Efficiency [DOGE] plans to eliminate positions in the federal government,” said Andrew Challenger, senior vice president and workplace expert at the firm. “It would have otherwise been a fairly quiet month for layoffs.”

However, DOGE has continued to cut aggressively across the government.

Various reports have indicated that the Veterans Affairs department could lose 80,000 jobs, the IRS is in line for some 18,000 reductions and Treasury is expected to drop a “substantial” level of workers as well, according to a court filing.

The year to date tally for federal government announced layoffs represents a 672% increase from the same period in 2024, according to Challenger.

To be sure, the outsized layoff plans haven’t made their way into other jobs data.

Weekly unemployment claims have held in a fairly tight range since President Donald Trump took office. Payroll growth has slowed a bit from its pace in 2024 but is still positive, while job openings have receded but only to around their pre-pandemic levels.

However, the Washington, D.C. area has been hit particularly hard by the announced layoffs, which have totaled 278,711 year to date for the city, according to the report.

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