The U.S.-China trade war could drag on for years, but a U.S. agreement with Mexico rewriting the North American Free Trade Agreement could happen as soon as August, U.S. Trade Representative Robert Lighthizer said today in a Senate hearing.
While the question of whether the painful Chinese tariffs on U.S. farm goods would also last for years was unanswered, lawmakers at the Senate Appropriations subcommittee meeting were dismayed about the prospect of a long-term dispute with China that is impacting U.S. exports of grains, oilseeds, seafood, meat, nuts and produce.
“I think some issues will be dealt with shortly … and I think, directionally, we’re going to have a problem with China that’s going to go on for years,” Lighthizer said.
When Lighthizer appeared to begin to address the tariffs directly, Sen. John Kennedy, R-La., cut him off: “You think it’ll take years with China?”
“I believe that to be true,” Lighthizer responded. “The way I analyze it, senator, they have a system and their system is challenging our system, in my opinion.”
China first hit the U.S. with tariffs in retaliation for the Trump administration’s decision to impose tariffs on imported steel and aluminum. Then, after the U.S. levied tariffs on $34 billion worth of Chinese goods to punish it for intellectual property theft, China retaliated again and aimed the new taxes almost solely on U.S. agricultural and food products.
Kansas Republican Sen. Jerry Moran, who chairs the Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies, told reporters he was very worried about the potential for a prolonged trade war with China, which has been shunning U.S. soybeans, sorghum and other commodities because of the 25 percent tariff.
“It is not surprising to me to hear that the expectation that the efforts to change China’s behavior is a long-term issue, not a short-term issue,” Moran said. “The problem is that in the meantime there’s a lot of pain to be encountered by not just farmers, but manufacturers and consumers.”
Moran stressed that U.S. farmers and farm groups “spent money and time and effort developing relationships with (Chinese importers) who actually buy our soybeans and grain sorghum. When these trade issues are behind us, I’m fearful we will have lost our purchasers because they are now purchasing from someone else, rather than (U.S. farmers).”
Moran also derided the $12 billion short-term aid package unveiled this week by the USDA to help farmers survive in the face of retaliatory tariffs from around the globe, especially in light of the expectation for a long, drawn-out battle with China.
“One of the concerns that I continue to have is the idea that we’re going to provide aid to farmers … but our markets are based generally upon long-term relationships.”
The answer, the Kansas senator said, is for the U.S. to end its disputes with Mexico and Canada over steel and aluminum tariffs, finalize a new NAFTA deal, and then join forces with our North American allies and the European Union to confront China on intellectual property theft.
On the NAFTA front, Lighthizer revealed to lawmakers during the hearing that he believes it’s likely he will get Mexico to sign off on a deal in August.
“My hope is that we will before very long have a conclusion with respect to Mexico and as a result of that, Canada will come in and compromise,” said Lighthizer, who noted that he is meeting today with Mexican NAFTA negotiators, including representatives of the newly elected President-elect Andres Manuel Lopez Obrador.
But it will be the current president, Enrique Pena Nieto, who the Trump administration wants to sign off on the deal with Obrador’s blessing. For that to happen, Pena Nieto would have to sign the pact 90 days before he leaves office on Dec. 1.
Lighthizer also confirmed that if NAFTA deals are struck with Mexico and Canada, the U.S. will rescind the steel and aluminum tariffs on the North American countries. That would presumably spur the two countries to stop retaliating. Mexican retaliatory tariffs are particularly harsh on U.S. pork, dairy, potatoes and apples. Canada is taxing U.S. yogurt, ketchup, maple syrup and other products.
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