The U.S. ag sector, already reeling from depressed prices, understands the White House’s desire to punish trade abuses by countries like China, but there is a growing fear that President Donald Trump’s aggressive tactics and rhetoric are threatening overseas markets, according to farm and trade officials speaking today at an Agri-Pulse forum.
“They are huge,” National Council of Farmer Cooperatives CEO Chuck Conner said about the impacts of China on U.S. farmers. “The simple fact that if we mess up here and do something wrong in China, the potential cost to an already down farm economy is off the charts.”
China is by far the largest foreign market for U.S. soybeans. The country bought about $14 billion worth of the oilseed last year, which represented more than a third of all U.S. production, American Soybean Association data show.
“Retaliation from China would add significant further injury to an already-hobbled farm economy,” the group said in a recent statement. “Prices are down 40 percent and farm income is down 50 percent, and we simply can’t afford for those numbers to get worse.”
But the Trump administration, in its effort to address non-ag issues, is preparing to announce tens of billions of dollars in new tariffs on China to retaliate against decades of intellectual property theft. That, together with Trump’s plan to levy new tariffs on steel, aluminum, washing machines and solar cells – all of which is expected to hit China to varying degrees – are expected to spur blowback that will hurt U.S. ag.
The Global Times, a Chinese government-run newspaper, printed an editorial today taking aim at U.S. soybean exports, signaling what the U.S. farmers are increasingly certain of: China will slap new taxes on U.S. shipments in retaliation over expected U.S. tariffs on Chinese products.
“The Trump administration has repeatedly accused China of violating international trade rules and threatened to impose higher tariffs on Chinese products,” the English language editorial reads. “But the U.S. is actually the breaker of WTO rules, which can be seen clearly by how subsidized U.S. soybeans are dumped on China.”
The growing threat of Chinese retaliation was a topic at the Agri-Pulse Ag & Food Policy Summit and USDA Undersecretary for Trade and Foreign Agricultural Affairs Ted McKinney responded.
“I continue to hope that China will understand that they’ve got to change their ways if they’re going to be on the world stage,” McKinney said. “We’re working on all kinds of options … to see how we can mitigate that … I suspect there will be some short-term pain … but I still say the best answer is, fix it for the long term, and that’s what we’re doing.”
But that offers little or no assurance to U.S. soybean farmers, an industry official told Agri-Pulse.
Connor said that while China may be breaking international trade rules, farmers also count on the country to continue to buy their crops.
Zippy Duvall, president of the American Farm Bureau Federation, praised Trump for reducing regulatory burdens on farmers and lowering taxes, but he also stressed that the president’s trade policies are threatening farmers and ranchers.
“Mr. President, we appreciate all the work you’ve done to give us relief with tax reform and give us relief from regulations, but you have really made us nervous when you start talking about trade,” said Duvall, who also spoke at the Ag & Food Policy Summit. “We have got to make sure that (U.S.) agricultural products continue to move across the world … so that farm families can continue to survive. You ran on support from rural America. They helped pave the way to the White House. We’re expecting you to stand up and fight for us … “
Trump is expected to announce a massive package of new tariffs on China to punish it for intellectual property threat as early as this week and the Chinese appear ready to respond.
“Strong restrictive measures need to be taken against the massive subsidies and dumping of soybeans by some countries on China,” China’s Global times said.
Gregg Doud, the new chief agriculture negotiator at the USTR, also spoke at the Agri-Pulse forum and he made it clear that the Trump administration has no intention of lifting pressure on China.
“Too many producers globally don’t operate under the same economics of supply and demand … like we do,” Doud said. “These folks have been breaking the rules for too long and President Trump has stepped into the breach and decided something has to be done about it and he’s absolutely right."
Meanwhile, U.S. Trade Representative Robert Lighthizer told lawmakers today that he is fully aware of China’s threat to block U.S. soybean exports in retaliation for U.S. tariffs, but he also stressed that the Trump administration will not back down because of that possibility.
“It’s extremely important and a real vulnerability,” Lighthizer said at a House Ways and Means Committee hearing. “It’s a major concern and something we worry about.”
Still, he said that if China did retaliate against U.S. soybean exports, the U.S. would hit back.
(This story was updated at 5:15 p.m. with Lighthizer comment at House Ways and Means hearing.)