Tag Archives: Trade

China’s President will meet with U.S. trade leaders Friday as the U.S. and China seek a trade deal before an early March deadline. The South China Morning Post reports China’s President Xi Jinping is scheduled to meet with a U.S. trade delegation in Beijing, which includes U.S. Trade Representative Robert Lighthizer.

China and the U.S. face an early March deadline set by the Trump administration to reach an agreement that could end the tit-for-tat trade war between the two nations. However, President Trump said this week he is open to extending the deadline, saying he could let the deadline “slide for a little while.” Trump is expected to meet with China’s President sometime in March in what some say could be a move to close an agreement between China and the United States.

The trade war served a blow to U.S. agriculture as China slapped retaliatory tariffs on U.S. farm commodities, most notably, soybeans and pork.

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 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.

Preliminary trade discussions between Washington and Brussels aren’t going well. In fact, Politico says the talks now appear to basically be an effort to not jump into a full-on trade war.

That possibilities potentially include new U.S. tariffs being slapped on automobiles. The two sides can’t even seem to agree on how the negotiations should proceed. The U.S. wants greater access to Europe’s agricultural markets. However, EU officials say that topic is a deal-breaker. They fear potential backlash from the EU’s politically powerful bloc of farmers. Brussels wants to get rid of tariffs on the industrial goods it ships to the U.S., including cars. However, President Trump is determined to protect American manufacturing. Politico says the stalemate over agricultural negotiations appears to be dimming hopes for a comprehensive transatlantic trade deal even before official negotiations get going.

To keep the U.S. president at the negotiating table, the EU has agreed to boost U.S. soy imports by allowing the use of crops subsidized for biofuel production. Commerce Secretary Wilbur Ross originally had a deadline of February 19th to make recommendations to the president regarding possible duties on auto imports. However, the government shutdown may have delayed that. Once the recommendations are made, Trump will have 90 days to make a decision The EU Parliament’s Trade Committee vote this month on whether or not to formally oppose the U.S.-EU negotiations.

WASHINGTON (AP) — Soybeans account for less than 1 percent of all the goods and services the United States sells the rest of the world.

But somehow the humble legumes are upstaging weightier, thornier issues as the Trump administration tackles trade disputes with China, the European Union and other trading partners. Critics worry that focusing on getting foreigners to buy soybeans and other U.S. goods is a distraction from the push them to make deeper economic reforms that would offer longer-lasting benefits to the United States.

The outsize importance of soybeans — mostly used as animal feed but also consumed by humans in everything from General Tso’s Tofu to soy lattes — was apparent again recently in two days of U.S.-China trade talks.

The world’s two biggest economies didn’t make much progress on their differences over the aggressive tactics — including cybertheft — that Beijing is allegedly using to challenge U.S. supremacy in cutting-edge industries like driverless cars and artificial intelligence.

But to the president’s delight, they did agree on one thing: In an unexpected deal that even surprised the top U.S. trade negotiator, China said that it would buy 5 million metric tons of American soybeans over an unspecified period.

“China as a sign of goodwill has agreed to purchase a tremendous, massive amount of soybeans,” Trump told reporters.

He said he had consulted with Agriculture Secretary Sonny Perdue and learned that “our farmers are extremely happy.”

“It’s a nice kind of olive branch,” said Peter Meyer, head of grain and oilseed analytics at S&P Global Platts.

Soybeans, which accounted for just $21.5 billion of $2.4 trillion in U.S. exports in 2017, seem to be punching above their weight in U.S. trade policy.

Farming is one of the few areas in which the United States sells more to the rest of the world than it buys, China included. Powerful lobbies represent American agricultural interests in Washington. And farmers tend to be enthusiastic Trump supporters.

The emphasis on soybeans has drawbacks, critics say. In the confrontation with China, for example, it diverts attention from the tough tech issues that divide the world’s two biggest economies and may decide whether Beijing or Washington presides over the economy of the future. And it implies that the Chinese might be able to avoid substantive concessions on their economic policies simply by agreeing to buy more American stuff and putting a dent in the massive U.S. trade deficit with China. That amounted to $336 billion in 2017 and was likely higher last year.

“There’s confusion about what the administration’s objectives are,” said Rufus Yerxa, president of the National Foreign Trade Council and a former U.S. trade official.

In a letter last week, Senate Minority Leader Chuck Schumer of New York and fellow Democratic Sens. Ron Wyden of Oregon and Sherrod Brown of Ohio warned Treasury Secretary Steven Mnuchin that any deal with China should force Beijing to end the abusive practices that put U.S. tech firms at a competitive disadvantage and to enact fundamental economic reforms that would make the Chinese market more accessible to U.S. and other foreign firms.

An agreement that settles for Chinese purchases of American goods, intended to narrow the trade deficit, would be viewed on Capitol Hill as “an abject failure,” they wrote.

Soybeans have taken a prominent place in previous Trump administration trade talks. The United States and the European Union at least temporarily backed away from a potential trade war over cars last July when the Europeans agreed, among other things, to load up on American soybeans.

America’s trading partners are well aware of the outsize influence farmers enjoy in Washington. When Trump last year started slapping import taxes on Chinese goods and on foreign steel and aluminum, they targeted their retaliation on the American Heartland, imposing tariffs on soybeans and other farm products.

China’s soybean tariffs had a devastating effect. Before the trade hostilities erupted last year, China bought nearly 60 percent of the soybeans the United States exported. Then the tariffs kicked in: In the first 10 months of 2018, U.S. soybean exports to China dropped to 8.2 million metric tons from 21.4 million metric tons a year earlier — a 62 percent freefall, according to the U.S. Department of Agriculture.

The backlog of unsold soybeans also pushed down U.S. prices, spreading more pain in farm country.

“We need some good news,” said Blake Hurst, a soybean and corn farmer in northwestern Missouri’s Atchison County and president of the Missouri Farm Bureau.

So Hurst and other farmers welcomed China’s decision to buy American beans. But their relief is limited. Hurst worries it’s a one-time purchase and not the resumption of business as usual.

China bought 31.7 million metric tons of American soybeans in 2017 and 36.1 million in 2016. Five million metric tons doesn’t do much to fill the gap.

“It’s still woefully short of what they used to do,” said Ron Moore, who grows corn and soybeans in Roseville, Illinois and serves as chairman of the American Soybean Association. “We’re not there yet.”

Even after U.S.-China trade tensions ease, soybean industry consultant John Baize said it might be a good idea for the U.S. and China to scale back their soybean trade. The economic and geopolitical rivals are likely clash again over issues such as trade, Taiwan and Chinese territorial claims in the South China Sea. Soybeans could once again be held hostage.

So Baize says the U.S. should sell more to other markets — such as Southeast Asia, Pakistan and Egypt — where demand for soybeans is growing as people earn more money and eat more meat, increasing the need for animal feed. Meanwhile, China should buy more from alternative suppliers like Brazil that probably aren’t potential adversaries, he said.

“We will wind up with more reliable customers, and they will wind up with less-disruptable suppliers,” he said.

China continues to purchase U.S. soybeans with a more than one million metric ton buy on Friday, and another 600,000 metric ton purchase reported Monday.

Following a round of trade talks last week, China pledged to purchase another five million metric tons of U.S. soybeans. Friday’s purchases by state-owned firms were believed to be destined for China’s state reserves, and thus immune from high import tariffs, according to Reuters.

The 25 percent tariffs, imposed last summer in retaliation for U.S. tariffs on Chinese goods, remain in place for U.S. soy imports by commercial crushers in China. With ongoing trade talks, China began purchasing U.S. soybeans at the end of December. China halted the purchases of U.S. soybeans when the tariff was put in place and purchased most of its needed supply from Brazil. Trade talks between China and the U.S. have a March 1 deadline.

Ag Secretary Sonny Perdue announced that his department awarded $200 million to 57 organizations through the Agricultural Trade Promotion Program.

The Hagstrom Report says the goal is to help U.S. farmers and ranchers find and get into new export markets around the globe. The promotion funds are part of the package that also included the Market Facilitation Program payments to farmers hurt be retaliatory tariffs, as well as a food distribution program to assist producers of targeted commodities. In making the announcement, Perdue made a thinly-veiled reference to China by saying, “This infusion will help us develop other markets and move us away from being dependent on one large customer for our agricultural products. This is seed money, leveraged by hundreds of millions of dollars from the private sector that will help to increase our agricultural exports.” Every sector of U.S. agriculture was allowed to apply for cost-share assistance under the program.

The Foreign Agricultural Service looked at all the applications in terms of the potential for export growth in the target market, direct injury from the imposed retaliatory tariffs, and the likelihood that the proposed project will have a direct impact on agricultural exports. The Trade Promotion Program provides assistance to eligible groups for things like consumer advertising, public relations, point-of-sale demonstrations, trade fair participation, and market research.

U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) have announced the U.S. wheat growers now have the opportunity to increase efforts to expand export market access with USDA’s Jan. 31 announcement awarding $200 million to 57 organizations through the Agriculture Trade Promotion Program (ATP). USW was awarded $8.25 million, which will be distributed over the next three years.

Administered by USDA’s Foreign Agricultural Service (FAS), the ATP is one of three USDA programs within the Trump Administration’s trade mitigation package — created to ease the effects of recent trade retaliation against U.S. farmers and exporters. The funds will support export market development programs led by U.S. trade associations, cooperatives, and other industry-affiliated organizations.

“U.S. wheat growers are facing tough times right now with the impact of retaliatory tariffs putting a strain on the export market and threatening many decades worth of market development,” said Chris Kolstad, USW Chairman and a wheat grower from Ledger, Mont. “We appreciate the recognition that farmers need help to manage this additional risk. This program is a positive step forward and our people are ready to get to work.”

“With the United States exporting half of the wheat crop it grows, programs like the Agricultural Trade Promotion Program (ATP) are crucial for our farmers to remain competitive in the global market,” stated NAWG President and Sentinel, OK wheat farmer Jimmie Musick. “We welcome today’s news that our sister organization U.S. Wheat Associates was awarded significant funding for trade mitigation activities. This funding will provide some relief to the adverse impact wheat has felt since the U.S. placed tariffs on Chinese goods, opening the door for retaliation. We hope to see these affected markets opened again quickly.”

On Jan. 31, U.S. Secretary of Agriculture Sonny Perdue announced details of a key component of the Trump administration’s trade mitigation package designed to address the effects of retaliatory measures impacting exports of U.S. agricultural products. The Agricultural Trade Promotion Program (ATP) provides additional funding to help U.S. exporters develop new markets and help mitigate the adverse effects of other countries’ tariff and non-tariff barriers.

The U.S. Meat Export Federation (USMEF) is one of 57 organizations that will receive ATP funding through the USDA Foreign Agricultural Service (FAS). USMEF President and CEO Dan Halstrom issued the following statement:

USMEF appreciates the Trump administration’s recognition of the extremely competitive environment U.S. agricultural products face in the global marketplace, and how changes in trading partners’ tariff rates can put these products at a significant disadvantage. As authorized by FAS, this funding will help USMEF and other organizations defend existing market share and develop new destinations for U.S. agricultural products, which is especially important at a time when trade disputes and preferential trade agreements have further intensified competition in many key markets.