Soy, pork, wheat join business frustration over Trump tariffs
July 9, 2018
After China and Mexico imposed additional tariffs on U.S. farm products last week in retaliation for the Trump administration's additional tariffs on steel and aluminum, farm groups joined the larger business community in pointing out how they are feeling, but appear unable to influence President Donald Trump.
The U.S. Chamber of Commerce has launched a state-by-state campaign to demonstrate the impact of the tariffs including on agriculture.
FARMERS FOR FREE TRADE
Brian Kuehl, executive director of Farmers for Free Trade, said, "The evidence of pain from a now multi-front trade war is multiplying every day. From China canceling soybean orders, to cheese exports to Mexico plummeting, to farm equipment prices rising, the stories of financial loss are now rolling in from farms across America. Today's actions will only create more nightmare stories of farmer's livelihoods being squeezed."
"American farmers want trade, not tariffs. They want to compete and win, not be 'protected' by Washington, D.C., from the foreign markets they've dominated for decades. This won't get solved by subsidies or blank checks. We need this administration to end the trade war and to open new markets so farmers can get back to doing what they do best: selling made in America ag products across the globe."
In a statement issued by Farmers for Free Trade, a group backed by the American Farm Bureau Federation and other agriculture groups, Brent Bible, a soy and corn producer in Romney, Ind., said, "For soybean producers like me this is a direct financial hit. This is money out of my pocket."
Recommended Stories For You
"These tariffs could mean the difference between a profit and a loss for an entire year's worth of work out in the field, and that's only in the near term," Bible said.
"Over the long haul, soybean producers are deeply concerned that China will continue to substitute American soy with soy from our global competitors. The losses these tariffs represent can't and shouldn't be made up by government programs. Frustration is growing quickly in the heartland, we need this solved now."
The American Soybean Association said that soybean farmers, whose crop represents 41 percent of the value of products on China's tariff list, will feel "the full effect" of the 25 percent tariffs that Trump placed on $34 billion of Chinese goods.
Since talk of the tariffs began back in March, U.S. soy prices have dropped more than $2 per bushel, ASA said.
"Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports," said John Heisdorffer, president of the group and a soybean grower from Keota, Iowa. "The math is simple. You tax soybean exports at 25 percent, and you have serious damage to U.S. farmers."
Heisdorffer noted that in 2017, China imported 31 percent of U.S. soybean production, equal to 60 percent of total U.S exports and nearly one in every three rows of harvested beans. Over the next 10 years, Chinese demand for soybeans is expected to account for most of the growth in global soybean trade, which he said underscores the importance of this market for future U.S. soybean sales.
Heisdorffer also noted that ASA has repeatedly asked Trump to consider other policies for reducing the U.S. trade deficit with China.
"Finally, in a last-ditch social media effort earlier this week, individual soybean farmers who will be directly affected by the trade conflict attached their photographs to statements appealing directly to the president and his advisers," ASA said.
The Los Angeles Times reported over the weekend that analysts in Shanghai said ships from the Pacific Northwest bound for China had been rerouted to Europe, Southeast Asia and elsewhere.
The National Pork Producers Council said U.S. pork producers now face punitive tariffs of 62 percent on exports to China, a market that represented 17 percent of total U.S. exports by value in 2017.
NPPC said that tariff includes a new 25 percent tariff in response to U.S. action under Section 301 of the Trade Act of 1974, a 25 percent punitive duty levied by China in early April in response to U.S. action under Section 232 of The Trade Expansion Act of 1962, and a 12 percent tariff on exports to China that already existed.
NPPC added that China also has a 13 percent value-added tax on most agricultural imports.
In addition, NPPC noted, Mexico also raised its punitive tariff on U.S. pork from 10 percent to 20 percent.
"Forty percent of total American pork exports now are under retaliatory tariffs, threatening the livelihoods of thousands of U.S. pig farmers," NPPC said.
Iowa State University economists calculated that from early March, when rumors of China's initial retaliatory tariff began circulating, through May, producers lost $18 per hog, or more than $2 billion on an annualized basis.
"We now face large financial losses and contraction because of escalating trade disputes. That means less income for pork producers and, ultimately, some of them going out of business," said Jim Heimerl, president of the NPPC and a hog farmer from Johnstown, Ohio.
"America's pig farmers and their families are patriots who are demonstrating enormous commitment to the greater good of our country as they shoulder a disproportionate share of trade retaliation against the United States," Heimerl said. "We need these trade disputes to end."
In a joint statement, the National Association of Wheat Growers and U.S. Wheat Associates said that, from March to June over the past three years, Chinese flour milling companies and their importers purchased an average of about 20 million bushels of U.S. wheat, returning well over $145 million to American farm families and grain handlers.
But in March, Chinese customers stopped making new purchases of U.S. wheat after the Chinese government threatened a 25 percent import tariff on U.S. wheat in retaliation to the threat of U.S. tariffs on Chinese imports.
"Today, damage to the livelihood of America's hard-working farm families is no longer just a threat," the wheat groups said. "The exchange of punitive tariffs between Washington and Beijing today represents the next phase of what could be a long and difficult struggle that will likely inflict more pain before we reach an unknown resolution."
China did not stop importing U.S. wheat in response to cases the United States filed in the World Trade Organization against Chinese subsidies, in part because Chinese demand for high-quality wheat crops is rapidly growing, the groups said.
But they added, "The unilateral decision to impose tariffs, however, has already had a direct, damaging effect on U.S. wheat growers. Wheat growers can only hope that the United States and China will stop trading salvos and we call on both governments to come to a resolution quickly. Farmers are eager to move past this dispute and start trading wheat and other agricultural products again soon."
Senate Foreign Relations Committee Chairman Bob Corker, R-Tenn., has put forward a bill to require congressional approval if a president wants to impose tariffs on national security grounds, but so far has not been able to get the Senate to consider it.
Business leaders have also noted that they have been unable to influence Trump or his advisers.
The Wall Street Journal noted in an editorial over the weekend that the impact of the tariffs is especially tough on U.S. agriculture.
The Journal editorial said "China is guilty of abusing the trading system, including the use of nontariff barriers and arbitrary enforcement to put foreign companies at a disadvantage," but that to succeed in the development of a new trading arrangement the United States would need the assistance of Europe, Japan, Canada and Mexico on which it has also imposed tariffs.
"On trade at least, 'America First' may soon mean America alone," the Journal said.
The editorial ended asking, "As the tariff casualties mount, even many Trump voters are going to ask: When is the master negotiator actually going to negotiate a better trade deal?"
But a Los Angeles Times article reported that in a small town in Missouri, manufacturing workers whose jobs and incomes are endangered by the tariffs resist criticism of the president.