Trump announces tariffs on China, unnerving U.S. ag

President Donald Trump June 15 announced the United States will sanction China with $50 billion worth of tariffs on more than 1,000 Chinese products, while China hit back, taking the U.S. closer to a trade war with the Asian nation, which has threatened to hit back with tariffs on U.S. soybeans, wheat, corn and other commodities.

The Office of the U.S. Trade Representative simultaneously released a revised list of Chinese goods subject to the additional 25 percent tariff stemming from concerns over intellectual property theft and technology transfers. U.S. Customs and Border Protection will begin collecting the additional duties on the bulk of that list beginning July 6.

A statement from the China Ministry of Commerce gave no details of what U.S. goods would be hit by Beijing’s retaliatory tariffs. But China in April had announced possible targets, including light aircraft, orange juice, whiskey, beef and soybeans—an economically and politically important export from America’s heartland. China is already imposing tariffs on U.S. pork, oranges, almonds, wine and other commodities in retaliation to U.S. tariffs on steel and aluminum.

“In light of China’s theft of intellectual property and technology and its other unfair trade practices, the United States will implement a 25 percent tariff on $50 billion of goods from China that contain industrially significant technologies,” a White House statement said. “This includes goods related to China’s Made in China 2025 strategic plan to dominate the emerging high-technology industries that will drive future economic growth for China, but hurt economic growth for the United States and many other countries. The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices.

“These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs. In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China.

“The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China.”

Secretary of Agriculture Sonny Perdue, on a trip to meet with Canadian Agriculture Minister Lawrence MacAulay at MacAulay’s farm on Prince Edward Island, said the U.S. must look at the market impact of possible counter-tariffs before using Commodity Credit Corporation funds or any other tools to soften the blow of tariffs on U.S. producers.

“It’s way too early to announce. We have to look at the market impact on an ongoing basis to look and see what market damage there is from the trade disruption. We’ll make a calculation and determination in conjunction with the White House and the Congress over what direction we can take,” Perdue said.

“We’ve talked about this for several months now about mitigation efforts and the President’s commitment to not make farmers bear the brunt of the disruptions and we’ll continue to do that. It’s still too early to talk about the mechanisms and mitigation of that. We’ll be talking about that next week.”

House Ways and Means Committee Chairman Kevin Brady, R-TX, whose committee handles trade issues, said, “We need to hit our target, which is China and its deceptive and harmful trading practices. But I am concerned that these new tariffs will instead hurt American manufacturers, farmers, workers, and consumers.

“While it’s encouraging that not all of the initially proposed tariffs will be implemented—as a result of the comment period that Congress called for—I am alarmed that additional products are now placed on the list for possible future action. These tariffs make it more difficult to sell more ‘Made in America’ products globally and expose many of our industries—particularly agriculture and chemicals—to devastating retaliation. I urge USTR to narrow these tariffs and implement an effective exclusion process that provides relief for American companies, unlike the problematic Commerce 232 exclusion process.”

Kansas Democratic Party Executive Director Ethan Corson said, “Kansas Republicans continue to sit on their hands as the livelihoods of everyday Kansans and key pillars of the Kansas economy are being attacked.

“China’s retaliation to the tariffs imposed by the United States is a serious threat to working families across our great state. But the Kansans who have been hit the hardest are those who power our agricultural and manufacturing sectors, which were already struggling with falling commodity prices, severe droughts and wildfires, and stagnant global competitiveness.

“Kansas Republicans are doing nothing to fight back. While the GOP has complete control of the federal government, they continue to keep their heads down as a speeding train heads straight for the Kansas economy.” 

Farm group reaction

Representatives from agriculture groups were quick to respond.

Farmers for Free Trade Executive Director Executive Director Brian Kuehl said in a statement, “For American farmers this isn’t theoretical anymore, it’s downright scary. It’s no longer a negotiating tactic, it’s a tax on their livelihoods. Within days, soybean, corn, wheat and other American farmers are likely to be hit with retaliatory tariff of up to 25 percent on exports that keep their operations afloat. When they do, they’re not going to remain silent.

“The imposition of these tariffs is not only a blow to our farmers, it’s a win for our competitors. When American soybeans and corn become more expensive, South America wins. When beef becomes more expensive, Australia wins. As this trade war drags on, farmers will rightly question why our competitors are winning while we’re losing.”

Davie Stephens, Kentucky soybean grower and vice president of the American Soybean Association, said growers are “distraught” over the tariffs and China’s possible retaliation.

“Crop prices have dropped 40 percent in the last five years, and farm income is down 50 percent compared to 2013. As a soy grower, I depend on trade with China. China imports roughly 60 percent of total U.S. soybean exports, representing nearly 1 in 3 rows of harvested soybeans,” Stephens said. “This is a vital and robust market that soy growers have spent over 40 years building and, frankly, it’s not a market U.S. soybean farmers can afford to lose.”

“As the country’s leading agricultural export at $27 billion, trade is vital for soybean growers and, while China has not yet directly retaliated against imports of U.S. soybeans, it seems imminent. ASA continues to advocate for increased trade opportunities, not trade-reducing tariffs, to help boost agriculture industries and rural communities in the current down farm economy.

U.S. Grains Council President and CEO Tom Sleight said, “The farmers and exporters we represent have been here before regarding China and they are well aware of what it’s like to deal with tariffs, counter-tariffs and policy restrictions. Since 2010, we have been adversely impacted by trade policy actions by China against U.S. distiller’s dried grains with solubles, sorghum, ethanol and corn. China is a very important market for U.S. coarse grains and their co-products, but so too is the rest of the world. We will stay closely engaged with the China market and its importance to U.S. agriculture, but we will also redouble our efforts in the rest of the world to expand demand.

“We are concerned any tariff opens this market to our competitors and locking out U.S. products doesn’t mean trade stops—it means other partners will take our place. Bottom line: tariff battles are never productive. We trust the leaders at the U.S. Department of Agriculture, the Office of the U.S. Trade Representative and the White House know how critical open markets are to our industry and appreciate their support during this process and in this tense time.”

National Farmers Union President Roger Johnson said, “None of the trade market disruption occurring presently should be looked at in isolation. The administration must work with Congress to develop a comprehensive solution to ensure family farmers can continue to provide for the nation. “Fortunately, the current farm bill drafts moving through Congress present an opportunity for the administration to do just that. And the current programs within the farm bill, if provided adequate resources, could provide a strong safety net.” 

Farmers Union fully supports strong trade enforcement to achieve fair and balanced trade markets. We also support the administration’s goal of reducing the enormous U.S. trade deficit. But our organization grows increasingly concerned that this administration does not have a plan to ensure family farmers and ranchers aren’t thrown under the bus for the sake of these goals.

Larry Dreiling can be reached at 785-628-1117 or [email protected].