Red-state governor sticks with Trump on China trade war but warns US farmers can’t take much more pain

Key Points
  • GOP Arkansas Gov. Asa Hutchinson gives “confidence and latitude” to President Trump in the China trade war.
  • “But we feel it’s appropriate to say there is a point that you should not squeeze us further,” Hutchinson says.
  • Hutchinson urges a quick resolution for the sake of the nearly 48,000 family owned farms in his state.
Arkansas farmers fear soybean tariffs as trade war escalates with China

Republican Arkansas Gov. Asa Hutchinson told CNBC on Monday that he gives “confidence and latitude” to President Donald Trump in the China trade war but urges a quick resolution for the sake of the nearly 48,000 family owned farms in his state.

“I continue to support the president," Hutchinson said. “But we feel it’s appropriate to say there is a point that you should not squeeze us further.”

The United States and China exchanged $34 billion worth of tariffs on Friday. American farmers are among the hardest hit by China’s 25 percent retaliatory duties on everything from meats and dairy to fruits and vegetables to rice and soybeans.

Agriculture is the No. 1 industry in Arkansas, adding $16 billion per year to the state’s $124 billion economy. Soybeans are Arkansas’ top export to the tune of about $850 million annually.

"With a 25 percent tariff [on soybeans] that'll be likely to be reduced by two-thirds," Hutchinson said on "Squawk Box." "Farmers are always the first casualty in a trade war." Soybean futures prices have been under pressure recently.

Hutchinson said a compromise would mutually benefit both the U.S. and China. “We don’t need to be in a position where somebody has got to say ‘uncle.’"

Trump has done many great things for the U.S., according to Hutchinson, including tax cuts, deregulation and nominating conservative judges to the Supreme Court. Trump’s second Supreme Court pick is expected to be announced Monday evening.

“We give a lot of confidence and latitude to the president [on trade],” the governor added. “But we hope we can bring an end to this trade war."

How long and how far the president should go on trade are considerations as Republicans fight to keep their majorities on Capitol Hill in the House and Senate in the upcoming November midterm elections. GOP candidates don’t want to give voters any excuse to cast their ballots for Democrats.

That’s especially true in states, including Arkansas, that Trump won in the 2016 election. They stand to lose the most from a trade war, Citigroup research showed. So-called red states have over 50 percent more jobs, 3.9 million, linked to foreign trade than blue states, according to last week’s Citi note.

Despite the “devastating” effects of the China trade war on soybean farmers, Ron Moore — a lifelong farmer from Roseville, Illinois, who has 850 acres of soybeans — told CNBC on Friday that he’s not angry with the president.

Moore, also chairman of the American Soybean Association, said farmers “admire” Trump for trying get China to be a “better and more fair trading partner.”

"We just think there are alternative choices” to achieve that goal, Moore added in last week's “Squawk Alley” interview. “The WTO resolution process is an alternative that needs to be explored before we keep these tariffs on.”

The World Trade Organization has been a frequent punching bag for Trump, who has said the group treats the U.S. unfairly.

WATCH: Farmer Moore: I'm not angry with Trump over China trade war

China targets US soybeans