USDA officials are working under increasing pressure to devise programs to help compensate farmers for expected losses due to new Chinese tariffs, but the complexity of the task is daunting.
USDA Secretary Sonny Perdue again pledged today that the department won’t abandon farmers who lose sales because of the escalating trade fight between the U.S. and China and he stressed that President Donald Trump stands behind his plan to come up with some form of assistance.
“If these tariffs actually come into play, it's going (to concern) our farmers,” Perdue told reporters today during a trip to Ohio. “But I talked to the President as recently as last night. And he said, 'Sonny, you can assure your farmers out there that we're not going to allow them to be the casualties if this trade dispute escalates. We're going to take care of our American farmers. You can tell them that directly.'"
For more than a month, USDA officials have been scrutinizing their authorities for emergency assistance under the Commodity Credit Corporation, and now they are trying to match those authorities with ways to help the wide array of farm commodities targeted by China in two lists for retaliation released Monday and Wednesday.
“We’re still trying to figure it out,” said one government official with knowledge of the effort. “There’s something that might work for pork, but probably wouldn’t work for ethanol, wine or oranges. There’s something that would work for cherries, but that might not work for ginseng. It’s not going to be a one-size-fits-all situation.”
China’s Commerce Ministry announced Wednesday its intention to slap a 25 percent tariff on U.S. soybeans, corn, beef, frozen orange juice, cotton, sorghum and whiskey, among other things, in retaliation to the U.S. plan to place $50 billion worth of tariffs on Chinese products to punish the country for years of intellectual property theft.
Separately, China announced on Monday $3 billion worth of tariffs on a list of 128 U.S. products like pork, oranges, cherries, almonds, plums and ethanol. This retaliation came on the heels of new U.S. global tariffs on steel and aluminum imports.
The impact on U.S. agriculture is expected to be significant. U.S. farmers sell about $14 billion worth of soybeans alone to China. Purdue University researchers released a study last week looking at the damages that Chinese tariffs of 10 or 30 percent would do on U.S. soybean exports. Extrapolating from those results, the 25 percent tariff that China announced today would force a reduction in U.S. exports to China by 60 percent and cause U.S. soybean production to fall by 15 percent.
But those numbers are theoretical, and for USDA to make any kind of payment to U.S. soybean farmers, the department would first have to see actual losses and then calculate assistance.
That takes time, and then there are several gray areas.
“What about oranges that didn’t go to China, but ended up being sold to Japan?” one government official asked to demonstrate the complexities. “Do we compensate our farmers for that?”
Compensation from the government would certainly help, but what farmers and ranchers want most is to maintain their hard-fought market gains in China and other countries around the world.
“The U.S. Soy industry has a 36-year track record of actively investing and partnering in programs that support China’s goals of achieving sustainable food security and food safety,” said Derek Haigwood, chairman of the U.S. Soybean Export Council and a farmer from Newport, Ark. “U.S. soybean farmers and exporters should know that USSEC is continuing to work on their behalf to build global demand and expand market access for U.S. Soy products in China and other markets.”
There’s still time to avert a full-blown trade war, allowing China to call off the latest tariffs, which won’t go into effect until the latest U.S. tariffs do next month.
“We do have a window of opportunity to reach a mutually beneficial trade position with China until the time that tariffs are fully implemented,” said Wesley Spurlock, chairman of the National Corn Growers Association. “We need to be measured, professional and business-like in our approach to keeping the trade doors open with China. Equally important, we need the President to understand the implications that these trade actions have for America’s farm families.”
In the meantime, USDA’s Perdue said he fully supports Trump’s tariffs on China.
“I think what the president is doing on intellectual property theft is the right thing,” said Perdue, who stressed that Trump wasn’t going to allow agriculture to “be a pawn” in the trade dispute.
But that’s already happening, said Sen. Dianne Feinstein, D-Calif.
“International trade is increasingly important and I am concerned that the voices of our farmers are not being heard by the administration,” she said. “Hardworking farmers in California and throughout the United States deserve better than to be a pawn in a global trade war.”