U.S.-China Trade: Farm Bureau Calls for Talks Before Tariffs

News / FBNews May 7, 2018

Warning that tariffs targeting China would ultimately hurt U.S. farmers and ranchers, the American Farm Bureau Federation is urging U.S. trade officials to work with their Chinese counterparts to resolve trade concerns before resorting to tariffs.

China is the second-largest market for U.S. agricultural products, with U.S. farmers and ranchers exporting more than $19.6 billion worth of their goods to China in 2017, Dale Moore, AFBF vice president of public affairs, pointed out in recent comments to the U.S. Trade Representative.

The comments were submitted in response to a White House announcement that the U.S. would begin the process of imposing tariffs on Chinese exports due to concerns over Chinese practices that impact U.S. intellectual property.

In early April, the USTR released a list of $50 billion of Chinese electronics, machinery and aerospace products for a recommended 25 percent import tariff. In response to the U.S. recommendation of tariffs, China has released a list of products for a potential 25 percent retaliatory tariff. The list includes soybeans, cotton, beef, corn, wheat, sorghum, tobacco, orange juice, cranberries and more. China’s tariffs will not go into effect until the U.S. tariffs go into effect.

The day China’s tariff target list was released, soybean futures fell as much as 5 percent, corn futures fell nearly 4 percent and wheat futures dropped 1.3 percent. The U.S. commodity market’s immediate negative response serves as an important test for what U.S. farmers and ranchers should expect if the tariffs are put in place, Moore said.

“Given the significance of the Chinese market, reductions in farm prices and production would be expected for every product on China’s retaliation list,” he cautioned.

With 60 percent of U.S. soybean exports going to China in 2017, soybean farmers are bracing themselves for a very hard hit. The consensus in the agriculture community is that a tariff of 25 percent on soybeans would reduce U.S. farm prices by 4 to 5 percent in the short-term. A farmer harvesting 1,000 acres of soybeans could see his income drop as much as $23,300.

At the same time, U.S. corn farmers are facing a potential price reduction of 2 to 2.5 percent. A farmer harvesting 1,000 acres of corn could see her income fall by as much as $15,400.

Moore also used the current situation for U.S. sorghum exports to China as an example of how devastating a trade dispute can be.

Since China’s Feb. 4 announcement that it was launching an antidumping investigation on U.S. sorghum exports, new sales of U.S. sorghum all but stopped. On April 17, the Chinese government announced its investigation had determined that U.S. grain sorghum was unfairly subsidized. As a result, U.S. grain sorghum imports immediately became subject to 179 percent duties upon entry.

“The loss of this important market is devastating for U.S. sorghum growers. It drives home that real people’s livelihoods are at stake when trade rhetoric and action is particularly heated,” Moore said.

Editor’s note: U.S. trade policy has already resulted in retaliation against U.S. agricultural exports to China. On April 2, China responded to newly imposed U.S. steel and aluminum tariffs with tariffs on imports of 128 U.S. product lines.  Of those 128, 94 are agricultural in nature; the remainder are steel and aluminum. The agricultural lines are divided into two categories – 86 products, including fresh and dried fruit, tree nuts and wine, that are subject to an additional 15 percent tariff and eight products, including pork, that are subject to an additional 25 percent tariff. These tariffs, which are in effect, impact approximately $2 billion worth of U.S. food and agricultural exports.

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