Tariff storm clouds on horizon? (Editorial)

by | Apr 13, 2018

“Not hope. It’s time to work,” Richard Wilkins, Del. farmer and former president of the American Soybean Association, said shortly after U.S. soybeans were sucked into an escalating trade dispute between China and the United States.
It was a call to action for farmers and their advocacy groups to not just stand in the bleachers but get in the game and get negotiators back to the bargaining table.
As the tariff threats volleyed back and forth, farm groups made appeal after appeal for the two nations to reconcile.
“Growing trade disputes have placed farmers and ranchers in a precarious position,” said Zippy Duvall, American Farm Bureau president, noting U.S. farmers are facing the worst agricultural economy in 16 years. “We have bills to pay and debts we must settle, and cannot afford to lose any market, much less one as important as China’s.
“We urge the United States and China to return to negotiations and produce an agreement that serves the interests of the world’s two largest economies.”
Soybeans are the big ticket item in the list of many agricultural products involved in the tariffs, including frozen beef, pork, cotton, fruits, nuts and ethanol.
In the first tariff announcement from China, responding to the United States, levying tariffs on steel and aluminum, 94 of 124 items were agricultural in nature.
“It is important to keep in mind these new tariffs are in addition to existing tariffs. For example, a Chinese importer of U.S. frozen pork had been paying a tariff of 12 percent before April 2; now she will pay a tariff of 37 percent on the same U.S. product, while competing against frozen pork products from our European Union, Canadian, Brazilian, Chilean and other international competitors subject to the regular 12 percent tariff,” Veronica Nigh, AFBF economist told Market Intel. “It doesn’t take much of a math or economic background to appreciate that the U.S. competitive position will quickly deteriorate in these conditions.”
China purchases 61 percent of total U.S. soybean exports, and more than 30 percent of overall U.S. soybean production worth about $14 billion.
“But there is still time to reverse this damage, and the administration can still deliver for farmers by withdrawing the tariffs that caused this retaliation, said current ASA President John Heisdorffer. “China has said that its 25 percent tariff will only go into effect based on the course of action the administration takes. We call on President Trump to engage the Chinese in a constructive manner—not a punitive one—and achieve a positive result for soybean farmers.”
The message got through to the White House, sort of. A White House spokesperson said Trump has asked USDA to provide a plan to protect U.S. farmers.
Last week, President Donald Trump said he would make it up to farmers affected, saying they “will be better off than they ever were.’’
“They understand that they’re doing this for the country,” Trump said during a cabinet meeting. “We’ll make it up to them. In the end they’re going to be much stronger than they are right now.”
Wilkins, interviewed on the FOX Business Network, said taking one for the team isn’t an option for farmers who have seen net farm income cut in half over the last five years.
“We can’t do that right now. Our economy is in worse shape than the general economy is,” Wilkins said on April 10. “We just can’t stand this right now.”
Farmers and rural Americans showed how powerful their unified voice could be, ultimately pushing Trump ahead in the presidential campaign.
They wanted less onerous government regulations that would hamper their business and ability to produce food. Trump delivered in some ways, most notably rescinding the Waters of the United States rule.
Now, the concern over what a trade war would do to an already floundering ag economy is palpable and as farmers get deeper into their field work, they must amp up their advocacy.
Just as in the election, there’s a lot riding on the outcome.

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