Tag Archives: tariffs

After nearly three months of negotiations, President Trump and Chinese President Xi could not reach a conclusion and bring to an end tariffs imposed on soy growers by China since July 2018, a measure that would have brought great relief to soy growers.

Davie Stephens, a soybean grower from Clinton, Kentucky, and American Soybean Association (ASA) president stated, “We are glad that talks between these two countries will continue without the tariff hike previously expected at the 90-day deadline later this week, but we need resolution and are discouraged that it’s still hard to see a tangible end in sight.”

The Chinese government has recently announced and begun to make good on government-to-government commitments to purchase American soybeans totaling around 20 million metric tons (735 million bushels), which is a positive step. However, ASA continues to push for more than piecemeal purchases and see open access to the China market restored through the removal of tariffs.

The value of U.S. soybean exports to China has grown exponentially the past 20 years, from $414 million in 1996 to $14 billion in 2017. China imported 31 percent of U.S. production in 2017, 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, making it a prime market for the U.S. and other countries.

While ASA is pleased that the Administration has announced that negotiations have been positive and will continue past Trump’s imposed 90 day window, soy growers continue to urge the Administration to rescind the tariffs and instead make soybeans a part of reducing our trade deficit with China.

A new report out from the National Bureau of Asian Research warns the Trump Administration to temper its expectations on China significantly changing its economic policies.

The bureau says China can’t make deep structural reforms to its economy in the 10 days before the March 1 deadline to produce a trade deal. The report says the better strategy may be to keep tariffs on Chinese goods in place, potentially for years.

The bureau also wants the U.S. to work with allies like the European Union and Japan to crank up international reform pressure on Beijing. “We don’t think inflicting collateral damage on the U.S. economy is a good thing,” says former Louisiana Representative Charles Boustany, one of the co-authors of the report. “All we’re saying is hold the line for now on tariffs, short of any kind of major breakthrough.” The report’s authors say a good idea in the interim is to work on what they call “interim agreements.” An example would be the Chinese lifting tariffs on U.S. farm goods in exchange for Trump removing tariffs on Chinese electronic goods.

SPOKANE, Wash. (AP) — Washington farmers can expect a tougher year covering expenses even if political leaders finalize trade agreements with the countries that import apples, beef and wheat from the Evergreen State, a Washington State University professor said.

Randy Fortenbery, an agriculture economics professor, delivered the economic forecast Wednesday at the Spokane Ag Expo and Pacific Farm Forum. He spoke at length about the troubling overall picture of the forces grinding against what has been a robust U.S. economy.

“I think commodity prices, except for sorghum, are going to be a little bit better than last year. But we are talking dimes not dollars,” Fortenbery said. “I don’t think the price increase will offset the cost increases.”

He openly contradicted President Donald Trump, who last year said trade wars are good and easy to win.

“The biggest issue . is making some assumptions about the trade environment. It really needs to get stabilized,” Fortenbery said. “I don’t care whether it’s big tariffs or no tariffs. People can adjust to tariffs if they know they are there permanently.

“What becomes difficult is changing the rhetoric on a weekly or monthly basis about what we are or are not going to do. That’s not just a risk in agriculture, that is a risk in what has been a really healthy U.S. economy in general.”

When last year Trump began threatening to place tariffs on U.S. imports of steel and aluminum, Fortenbery said, China immediately targeted two things Americans export the most: agricultural commodities and airplanes.

“We have, I’m going to argue, probably one of the most aggressive trade realignment programs since maybe the 1920s,” he said. “What I mean by that is we are addressing every one of our trading partners simultaneously. We haven’t done that in decades.”

The problem is that large companies have operations in several countries. Some steel companies produce raw material in one place and then ship it to the U.S. to produce finished products. As a result, some face 25 percent tariffs on the same steel twice, which gets passed on to consumers.

“Winning trade wars is not easy. They don’t really work,” Fortenbery said. “It’s one thing to go to a country and say we have some problems with the way we are trading. Going after everybody at the same time and expecting a positive outcome in the short run, that’s a real challenge.”

Trump has announced agreements with leaders from Canada and Mexico to replace the North American Free Trade Agreement. But until Congress ratifies the new deal, Mexico has withheld buying the same amount of American wheat and other commodities.

“This is a huge deal because we were told (NAFTA) was the worst trade deal ever. We were told the new one is an excellent trade deal, but until it actually gets ratified by Congress, it doesn’t go forward,” Fortenbery said. “In the current political environment, you can imagine we might have some political challenges.”

Trump has also suggested he would pull out of NAFTA completely if Congress refuses to ratify the new deal, Fortenbery said.

“That would be a bad thing for agriculture. Mexico and Canada are really important trading partners for us on the ag side,” he said.

Even if old trading partners settle the current trade war, U.S. producers have no guarantee that other countries will import as many American goods as before.

“The problem with trade disruptions is they last longer than one year,” Fortenbery said. “Even if we come back as price competitive with a new deal . it doesn’t mean that Mexico comes back and buys from us in the same volume, because they have already established a new relationship with someone else.”

The top crop in Washington in terms of value is apples. The Evergreen State produces about 67 percent of nation’s apple crop, he said.

“Our two biggest buyers are Mexico and Canada,” he said. If the new deal isn’t ratified “then the fruit sector of Washington is significantly at risk. How this resolves itself will have a lot to say about what really does happen in 2019 and 2020.”

One bright spot has been high beef prices.

“Demand has really grown. We have exported a lot more beef than projected,” Fortenbery said. “But a large part of that demand is from international customers. We have these huge inventories if the demand starts to decline because we are having trouble moving product into other countries.”

Along with the trade wars, the value of the U.S. dollar has increased. That means a company in France or China will have less purchasing power to import Washington-grown apples or cherries.

“If we continue to have significant uncertainty in terms of what our trade opportunities are going to be this coming year,” Fortenbery said, “then we might see a significant decline in farm income.”

The American Soybean Association says trade talks are good, soybean purchases are good, but lifting the tariff that China slapped on U.S. soybean imports would be better.

The ASA says it’s the only way U.S. soybean producers can regain commercial access to China, their most significant overseas market. “It’s encouraging that the administration is keeping soybeans in their trade conversations with China,” says Davie Stephens, ASA President. “The Chinese Vice Premiere’s commitment to buy another five million tons of soybeans is encouraging, but it’s not the answer. We need an agreement at the end of the 90-day period that specifically rescinds the tariff that China has imposed on U.S. soybean imports.”

The ASA president says the “good-faith” purchase commitment is a positive sign that both countries are working towards the real progress that soybean producers are looking for. However, the purchases don’t offset the damage done to the soybean industry since tariffs were imposed. It also doesn’t repair the long-term damage the tariffs have done to a relationship that was decades in the making. ASA is joining other organizations in asking congressional members to help strengthen their message to the Administration that rescinding the tariffs are vital to the health of the farm economy.

The agriculture group Tariffs Hurt the Heartland commissioned a study on the impact of the trade was on the U.S. economy if the trade war with China picks up again in March, when a temporary truce between the countries runs expires.

The study shows the U.S. economy could lose up to 2.2 million jobs and the average family of four would pay an extra $2,400 for goods and services every year. The study was prepared by the firm Trade Partnership Worldwide. It considered four scenarios, including the worst-case possibility in which new tariffs are slapped on auto imports, as well as all Chinese goods getting hit with a 25 percent tariff. The report says, “In some instances, the tariff actions erase all of the anticipated gains from tax reform.”

Republican and Democratic senators held a news conference this week at the Capitol to discuss the trade study and share stories from constituents that have been hurt by the trade war. U.S. Trade Representative Robert Lighthizer went before Congress this week and heard a lot about the need to remove the tariffs on aluminum and steel imports. Senate Finance Chair Chuck Grassley told reporters after the 90-minute meeting with Lighthizer that, “It was made very clear that the aluminum and steel tariffs should go before Congress takes up the USMCA agreement.”

The U.S. Chamber of Commerce, Business Roundtable, and two other coalitions with dozens of trade associations involved are backing legislation dealing with tariffs in national security situations. Legislation before Congress would require congressional approval before the president can impose tariffs based on “national security.” President Donald Trump used that authority to impose tariffs on steel and aluminum imports, and he’s threatened to do the same thing with foreign-made vehicles and imported auto parts.

Similar bills introduced last year to limit that authority didn’t make it through Congress. However, it’s a little more uncertain now that the Democrats control the House of Representatives. Business groups of all varieties say that the Trump tariffs and retaliatory duties that came from our trading partners in response have hurt American businesses. They say U.S. industry, farmers, and workers have all suffered financial strain and it’s time for Congress to step up and assert itself when it comes to American trade policy. Rufus Yerxa, president of the National Foreign Trade Council, says, “The support of such a broad cross-section of industry, agriculture, and retail groups says a lot about how harmful the steel and aluminum tariffs have been.”

The Bicameral Congressional Trade Authority Act was introduced in both the House and Senate on January 30th, and supporters are still trying to figure out how much interest there is from other lawmakers.