American farmers are on the front lines of U.S. trade spats.
Uneasy about losing NAFTA, an agreement they say is mostly working for them, they’re now even more jittery about becoming collateral damage in a China-U.S. trade war, despite President Donald Trump’s promise of protection.
Farmers prefer markets to largesse, two senior federal farm state legislators told members of the North American Agricultural Journalists (NAAJ) on Capitol Hill April 10.
“We need a market,” said Kanas Republican Senator Pat Roberts, who also chairs the Senate agriculture committee. “We need to sell our product. If we do that we don’t need to have some kind of crazy-quilt subsidy program that would set a precedent.”
In a separate meeting Collin Peterson, Minnesota’s seventh congressional district representative and senior Democrat on House agriculture committee, had a similar response.
“On trade I am against a one-time bailout of the situation that was created by the (Trump) administration,” he said, adding he wants government money in the upcoming Farm Bill to offset low commodity prices.
“This (possible one-time payment) is not what farmers want. They want their markets they’ve spent all these years building up left intact and not screwed up… Giving them some (aid) I don’t think is necessarily going to buy them off.”
That’s also the message from the largest U.S. farm group, the American Farm Bureau Federation.
“America’s farmers would vastly prefer to hitch their wagons to the export opportunities offered by trade,” a farm bureau official said in a published report earlier this month. “The economic value of our exports would be difficult to match, and we need to hear additional details from the administration.”
April 2 China imposed a 25 per cent import tariff on American pork and seven other products including recycled aluminum. It also set a 15 per cent duty on other American products including fruits, nuts, wine and steel pipes. All were in retaliation to U.S. plans to slap US$50 billion worth of tariffs on Chinese imports, which the Trump administration says is aimed at getting China to stop stealing American intellectual property.
In response to China’s duties, Trump threatened to add another US$50 billion in tariffs on other Chinese products exported to the U.S.
China responded with plans for a 25 per cent tariff on imports of American soybeans, corn, wheat, cotton, sorghum, beef, orange juice, tobacco and whiskey.
American soybean farmers are especially concerned because China is the United States’ and world’s largest soybean customer. China typically buys one of every three bushels of exported U.S. soybeans.
“I understand the anxiety very well,” Deputy Agriculture Secretary Stephen Censky told the NAAJ’s annual meeting April 9.
He should. Censky was CEO of the American Soybean Association for many years before being appointed deputy agriculture secretary.
Censky repeated Trump’s “I have their backs” message to farmers.
“He has directed (Agriculture) Secretary (Sonny) Perdue and us at USDA (U.S. Department of Agriculture) to make sure they’re doing all that is necessary to protect and preserve U.S. farmers and ranchers because we recognize that sometimes when we do take (trade) action… farmers and ranchers are on the tip of the spear when it comes to retaliation. We want to make sure that they are not harmed in that process.
“There’s nothing to announce yet, but certainly that’s a high priority… ”
Risks to China
Chinese consumers could be as negatively affected or even more by a soybean tariff since the country relies so heavily on American stocks, Censky said.
Although he didn’t say how Washington might compensate farmers, Censky said there are many options.
“We are looking at all of our authorities… we have under the Commodity Credit Corporation…” he said.
That means in addition to farm payments the U.S. government could buy surplus production in an effort to bolster prices.
With Canadian pork and soybean prices set in the U.S., if American farmers get subsidies to offset lower prices that would make Canadian farmers less competitive. It also raise the spectre of Canadian countervailing duties on American products exported to Canada.
American legislators haven’t thought about such unintended consequences, Peterson said.
“They are just trying to survive,” he said. “They’re trying to explain to people how it is that their president is doing this.”
However, Censky said any farm aid in response to Chinese tariffs will be “in compliance with our WTO existing obligations.”
Michigan Senator Debbie Stabenow and the Democrat’s ranking member on the Senate agriculture committee, shares Trump’s concern about unfair Chinese trade practices. But she told reporters America’s response must be “thoughtful and strategic.”
“We have to be careful in terms of unintended consequences,” she said April 10.