Source: POLITICO'S MORNING AGRICULTURE, 7/20/18

White House trade adviser Peter Navarro on Thursday downplayed the economic impact of the tit-for-tat tariff war between the U.S. and China as a mere "rounding error" compared with either country's economic output.

"My point is that it's much less disruptive than these headlines would suggest, and it's much more constructive as we see the adjustments made in terms of where investment is going to go and where we're going to build," he said during an interviewon CNBC.

Playing chess: Navarro said the administration is looking at the broader "chess board" in terms of its trade strategy. There's another move already in the works — the administration is preparing to impose tariffs on another $200 billion worth of Chinese imports — and Wilbur Ross' Commerce Department is studying whether imported automobiles and parts threaten U.S. national security and warrant trade restrictions under Section 232 of the Trade Expansion Act of 1962 — the same law that was used to impose duties on most nations' steel and aluminum exports to the U.S., which led allies like Canada, Mexico and the European Union to hit back, with plenty of that early pain being spread across agriculture.

As President Donald Trump tries to realign America's trade relationships and force China's hand in areas like protection of intellectual property, many farmers are trying to navigate uncertain conditions and prepare for what could be a long haul — and some, like in the pork industry, have been getting hit by retaliatory tariffs since the spring, when Trump's trade moves first began to prompt retaliation.

Not having it: Sen. Joni Ernst did not let Navarro's comments go without a response: "Mr. Navarro, America's farmers are caught in the crosshairs of this game of 'chess,'" the Iowa Republican said in a statement. "Offhand comments like the ones that Mr. Navarro made ... disregard the people whose livelihoods depend on global trade. In Iowa alone, more than 456,000 jobs are supported by trade, and these new tariffs are threatening $977 million in state exports. That is no 'rounding error.'"

The auto tariffs retaliation scenario: On Thursday, at a Commerce Department hearing on the administration's auto tariff investigation, EU Ambassador to the U.S. David O'Sullivan said the retaliation that potential new U.S. duties on imported autos would provoke would probably hit far more American goods than have been subject to retaliation over the steel and aluminum duties.

"Import restrictions resulting from the present investigation could result in countermeasures on a significantly higher volume of U.S. exports, which we estimate at $294 billion, around a fifth of total U.S. exports in 2017," O'Sullivan said.

In that kind of a retaliatory scenario, ag taking more body blows is essentially a foregone conclusion.