President Donald Trump late Thursday imposed tariffs on $60 billion in Chinese goods on the grounds that China had treated U.S. companies unfairly by coercing them into surrendering trade secrets for market access.
China immediately threatened retaliation, and U.S. farm leaders expressed fears that agriculture will bear the brunt of the Chinese response.
Trump directed Trade Representative Robert Lighthizer to come up with a list of products for increased tariffs within 15 days, but China immediately announced its intent to put tariffs on $3 billion of U.S. products, including 15% on fruit and wine and 25% on pork, The Washington Post reported.
The full Chinese list for the 15% tariffs include fresh fruit, dried fruit and nut products, wine, modified ethanol and American ginseng, according to a Chinese Commerce Ministry statement.
The U.S. tariffs will be imposed under Section 301 of the Trade Act of 1974.
A China-U.S. trade war would affect economies that account for roughly 40% of global output, which explained a fall in stocks on Wall Street, the Post noted.
The National Pork Producers Council said Chinese tariffs on U.S. pork would harm the rural economy.
“We sell a lot of pork to China, so higher tariffs on our exports going there will harm our producers and undermine the rural economy,” said NPPC President Jim Heimerl, a pork producer from Johnstown, Ohio. “No one wins in these tit-for-tat trade disputes, least of all the farmers and the consumers.”
Last year, the U.S. pork industry exported $1.1 billion of product to China, making that country the No. 2 value market for U.S. pork, NPPC said. Total farm sales to China topped $20 billion, NPPC added.
“When it comes to trade, we expect all countries to follow international rules and to trade fairly,” Heimerl said. “We also expect all countries to resolve trade disputes in a way that doesn’t harm businesses, farmers and consumers.”
The U.S. Sorghum Producers noted in an email that they are already facing a difficult retaliatory situation due to a Chinese U.S. anti-dumping and countervailing duty investigation into imports of U.S. sorghum launched by China in February.
“There is undoubtedly a lot of uncertainty related to trade with China in this current environment, and NSP continues to work to not allow our members to be harmed and will provide information to our growers as it becomes available,” the group said.
U.S. Grains Council (USGC) President and CEO Tom Sleight said the organization was not surprised but is dismayed by the new tariffs, which will lead to “painful retaliation” and have already complicated global efforts to promote sales of U.S. grains and grain products.
Grain News on AgFax
“The farmers and exporters we represent have been here before in our relationship with China,” Sleight said, describing trade policy actions by China against U.S. distillers dried grains with solubles (DDGS), sorghum, ethanol and corn.
“We have supported targeted, U.S. government efforts to address these issues but nevertheless remained dedicated to the China market because it holds immense growth potential for U.S. agriculture.”
The U.S. Grains Council also noted that Ray Starling, special assistant to the president covering agriculture, spoke at an AgriPulse forum and said the Trump administration would do “everything within our power” to protect farmers but the council also pointed out that Starling “was not forthcoming with details on specific measures to protect agriculture exports.”
Meanwhile, Gregg Doud, the newly-sworn-in chief agriculture negotiator in the Office of the U.S. Trade Representative, said the administration would continue to pursue cases against China at the World Trade Organization focused on corn and other grain subsidies and tariff rate quotas affecting those products.
U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) said that while their growers “understand and support the need to enforce international trade rules, we are very concerned about the implications of the Trump administration’s decision today to impose more than $60 billion in tariffs on Chinese goods under Section 301 of the Trade Act of 1974.”
“We agree that unfair Chinese government policies create unnecessary trade distortions that hurt U.S. farmers and other industries,” the wheat groups said.
“Our organizations urged the U.S. government to challenge China’s domestic price support and tariff rate quota compliance that led to cases disputing these policies within the World Trade Organization (WTO). Such cases served notice to China and our trading partners that the United States would lead a legitimate effort to enforce existing trade rules — by following those rules.
“We believe that it is in the nation’s best interests, and the interests of the wheat farmers we represent, to challenge trade distorting policies to the maximum extent possible within WTO rules.”
But the wheat groups added, “It is unfortunate that the well-intentioned decision to challenge other Chinese trade policies has been implemented in a way that violates the rules outlined in Article II of the GATT Agreement.”
“Recent actions including withdrawal from the Trans-Pacific Partnership and implementing steel and aluminum tariffs on the basis of national security have already undermined U.S. leadership in international trade. Now this action further erodes historical support for rules-based trade policies, even though China will likely bring a case against the tariffs within the WTO dispute settlement process.”
American Soybean Association President and Iowa farmer John Heisdorffer said, “Multiple reports indicate the Chinese have U.S. soybeans squarely in their sights for retaliation, and this decision places soybean farmers across the country in financial danger.”
“Farm incomes are down nearly 50% from 2013. There is a real struggle in agriculture to keep everything going right now. It’s extremely frustrating to have the administration taking aim at our largest trading partner.”
“If there was any question about the likelihood of retaliation by China after previous actions by the administration to protect domestic manufacturers, that doubt was erased today,” Heisdorffer said. “American soybean producers oppose this decision by the administration that puts exports of our soybeans to China in jeopardy.
“Agriculture is not like other industries that can sustain extreme volatility in markets and prices. If demand drops and prices collapse, soybean farmers will go out of business. Not in five or 10 years, but this year and next. Trade is an existential issue for soybean farmers. We export over half of our crop. China is the largest driver of world demand for soybeans. The tough line the administration is taking on China will lead to retaliation that will cost many farmers their livelihoods.
“We previously requested a meeting with President Trump to discuss our concerns and have received no response to date,” Heisdorffer said. “On National Ag Day Tuesday, the president tweeted that his administration is delivering for farmers. But delivering for farmers means supporting trade and, for soybean farmers, that means supporting trade with China.”
Brian Kuehl, the executive director of Farmers for Free Trade, noted that Trade Representative Robert Lighthizer had said in congressional testimony that “farmers get the short end of the stick” when the United States imposes raised tariffs like these on other countries.
Kuehl added, “Given that China is the second largest export market for American farmers and ranchers, the pain from retaliation could be significant. In fact, state-run Chinese media has already indicated that American soy exports could be targeted. That would mean that the nearly $14 billion in annual soy exports from American farmers could face an immediate tax. Other reports from China have noted that American pork and sorghum exports may be targeted.”
“Nobody wins in a trade war, but it’s also true that some sectors of the economy lose more than others, and over the years, American agriculture has consistently paid the price for protectionism,” Kuehl said.
“We urge the Trump administration to consider the impact these escalating tariff actions will have on farm country. With farm incomes declining, the last thing our farmers and rural communities can afford is a tax on the export markets they rely on.”
The National Farmers Union noted that it supports aggressive efforts to fight unfair trade practices, but lamented “the administration’s apparent lack of a plan to safeguard the interests of family farmers.”
NFU President Roger Johnson released the following statement:
“Our trade agenda for the past 30 years has been to promote free trade at all costs, ignoring countries cheating on intellectual property rights and currency manipulation. While we’re appreciative of the administration’s focus on creating fair trade between the U.S. and our trading partners, their ‘bull in a china shop’ approach to fixing our trade woes is dangerous.
“Family farmers and ranchers are always the first to be hit by retaliatory tariffs, and in the case of China, significant exports markets are likely to be the first casualty. NFU is very concerned about the effects that China’s proposed retaliatory efforts would have on all agricultural products, particularly given our already burdensome inventories of grains. The president must have a plan in place to protect family farmers before seeking to remedy unfair trade practices.”