U.S. commodity organizations responded quickly and forcefully Wednesday following China’s announcement of retaliatory tariffs that likely will target agricultural commodities.
Statements from wheat, soybean, cotton, grain sorghum, and corn organizations and the American Farm Bureau call on the Trump administration to back off unilateral tariffs and engage China in responsible trade negotiations.
The U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) say in a joint statement that the Trump administration’s actions could be violations of World Trade Organization rules.
Commodity organization spokesmen say the threat of retaliatory tariffs have already damaged markets, sending cotton almost down limit, with soybeans, wheat and sorghum among other commodities with marketplace concerns.
“The administration can support rural Americans by working with Chinese officials to avoid these damaging tariffs,” said NAWG President Jimmie Musick, a wheat farmer from Sentinel, Okla.
USW Chairman Mike Miller, a wheat farmer from Ritzville, Wash., says actions by the administration threaten efforts to improve trade relations with China. “Farmers across the country have invested a lot of money and time over the years to develop a Chinese market that has great potential to buy even more American wheat. Now, that effort is in jeopardy at a time when big global supplies have already pushed farm gate wheat prices down to unsustainable levels.
“People may not know that China imported more than 61 million bushels of U.S. wheat in marketing year 2016/17, making it our fourth largest buyer in the world.”
The National Cotton Council, in a statement released Wednesday afternoon, expressed concern “that China’s announcement of significantly higher proposed tariffs on U.S. raw cotton shipped to that country would significantly harm the economic health of the U.S. cotton industry.”
China ranks as the second largest export market with purchases of approximately 2.5 million bales of U.S. cotton for the current 2017 crop.
“I cannot overstate the importance of China’s market to U.S. cotton farmers and the importance of U.S. cotton in meeting the needs of China’s textile industry,” NCC Chairman Ron Craft said. “The cotton industries of the United States and China enjoy a healthy, mutually beneficial relationship.”
“Now, this is no longer a hypothetical, and a 25 percent tariff on U.S. soybeans into China will have a devastating effect on every soybean farmer in America,” says American Soybean Association (ASA) President John Heisdorffer. “We believe strongly that soy can help reduce our trade deficit by increasing competitiveness, and we will continue to work with our partners at USB and USSEC to show how that’s possible.”
The National Sorghum Producers (NSP), Lubbock, Texas, says the tariffs announced by China, including a possible 25 percent hit to U.S. sorghum imports, will add more financial burdens to U.S. farmers.
NSP Chairman and Nebraska farmer Don Bloss adds, “Right now we are taking a close look at the list indicating sorghum and many other important agriculture products are among those included for a possible 25 percent Chinese tariff. There are additional steps in the process announced today. The proposed tariffs are not immediate and the timing of possible additional tariffs remains uncertain. But the financial toll on our producers is already taking place with this morning’s widespread market reaction to the announcement by the Chinese government.
“There are no winners in a trade war, only casualties,” says Texas farmer Wesley Spurlock, chairman of the National Corn Growers Association (NCGA). “As trade tensions continue to mount with China, the expanded list of tariffs on food and agriculture exports are making America’s farmers the first casualties.
“In 2018, the U.S. is forecast to export $139.5 billion in agricultural goods to the 95 percent of consumers who live outside the U.S. Instead of new protectionist policies, our nation’s focus should be on growing market access and promoting expanded trade from our most competitive industries.”
Farm Bureau Federation President Zippy Duvall said, “China’s threatened retaliation against last night’s U.S. tariff proposal is testing both the patience and optimism of families who are facing the worst agricultural economy in 16 years. This has to stop.
“Growing trade disputes have placed farmers and ranchers in a precarious position. We have bills to pay and debts we must settle, and cannot afford to lose any market, much less one as important as China’s. We urge the United States and China to return to negotiations and produce an agreement that serves the interests of the world’s two largest economies.”
NCC’s Craft concurs. He says NCC strongly encourages the two governments to engage in immediate discussions “that can resolve trade tensions and preserve this long-term collaborative relationship. The U.S. cotton industry stands ready to assist the U.S. government and our trading partners in China to find a resolution to this damaging trade dispute.”
Kim Anderson, Oklahoma State University, takes a more optimistic but long-term view, suggesting that the effect could be insignificant.
“Corn and beans are the big items, and China put a tariff on corn three or four years ago. China buys very little U.S. beans during this time of year.”
He adds that the long-run outcome is unknown. “I do know that U.S. ag has weathered some pretty dumb policies by both Republican and Democratic administrations. In my opinion, the best thing to do is produce a quality product that buyers want at a competitive price and things will work out in the long run. Time will tell if I’m wrong.”
Virginia Tech professor of agricultural and applied economics Mary Marchant says the back and forth between Trump and China could lead to a trade war that will hurt both countries. Marchant has focused her research efforts on Chinese markets for over a decade.
“We’re looking at game-theory playing out on the world stage in real time,” said Marchant. “And that theory predicts that both countries lose in the end. Protected sectors may gain, but overall, the results of a trade war are bad for both countries’ economies.”
She noted that China is the No. 1 market for U.S. agricultural products, and soybeans are the top U.S. export to China. “If China implements tariffs on soybeans, which it is likely to do if things don’t settle down, the results could be devastating for U.S. farmers. China has been diversifying its suppliers and these tariffs could expedite this process and leave U.S. producers in a lurch. What we need is cool heads to prevail to deescalate the situation. China and the U.S. have a synergistic relationship and we need each other; right now, we just need leaders that promote this.”
The tariff cuts deeper than commodity markets says Colin Wellenkamp, executive director of the Mississippi River Cities & Towns Initiative.
“U.S. agricultural exports to China are critical to the Mississippi River economy,” Wellenkamp said in a statement. “U.S. exports of agricultural products to China totaled $19.6 billion in 2017. China is the second largest ag export market for the United States, behind Canada. China is the largest international destination for U.S. Soybeans, importing more than 27 million tons of U.S. soybeans in 2017.”
He adds, “Agriculture is the third largest economy on the Mississippi River, generating $33 billion in annual revenue, directly supporting 192,00 jobs just in the Mississippi River Valley.”
The tariffs up to this point had been a mixed-bag for the Mississippi River, with some being helpful, some causing concern says Wellenkamp. “We were watching these tariffs very closely as the steel and aluminum tariffs had varying impacts. But, now we’re in a territory that directly implicates our bread and butter.”
Ag groups are unified in urging the administration to take a step back and reevaluate unilateral trade decisions.
During a press stop Wednesday, Secretary of Agriculture Sonny Purdue said he had been assured by President Trump that farmers would not be allowed to be “the casualty,” in a trade dispute with China. He added that the administration has 30 days to reach a solution.
The ag industry remains concerned.
“Trade wars are not good for anyone, and we urge President Trump and other negotiators to take a constructive approach in the ongoing negotiations that do not threaten more harm to U.S. sorghum producers,” Bloss said. “Our hope is that this situation will be resolved sooner rather than later.”