Senators signaled their strong dissatisfaction with President Trump’s policy of trade warfare on Wednesday, while Trump said, falsely, that “farmers have done poorly for 15 years,” and pledged to remove trade barriers so that U.S. exports flow “better than ever before.” Meanwhile, futures prices for corn, soybeans, and wheat fell again due to U.S.-China trade turmoil.
On an 88-11 vote, the Senate approved a nonbinding resolution to require that Congress have a role when the president invokes tariffs in the name of national security, the justification used by the White House in setting recent duties on imported steel and aluminum. The sponsors of the resolution, Republican Sens. Bob Corker, Pat Toomey, and Jeff Flake, said they will seek a vote on legislation they introduced in June that would require congressional approval of such tariffs. They were thwarted last month when they tried to attach the proposal to the Senate farm bill.
“It’s time for Congress to reassert its constitutional responsibility on trade, and today’s bipartisan vote shows that there is a way forward to accomplish this,” said Toomey, of Pennsylvania. Flake said the vote was “a clear rebuke of this administration’s trade policy.” Corker said he hoped for a vote in the near future to require congressional approval of tariffs involving national security.
Trump, who’s in Europe at a NATO summit, said on social media, “I am in Brussels, but always thinking about our farmers. Soy beans fell 50% from 2012 to my election. Farmers have done poorly for 15 years. Other countries’ trade barriers and tariffs have been destroying their businesses. I will open … things up, better than ever before, but it can’t go too quickly. I am fighting for a level playing field for our farmers, and will win!”
Trump made a similar misstatement of economic history on June 4 — “Farmers have not been doing well for 15 years” — along with a similar promise to wipe out harmful trade barriers and tariffs on farm exports. Actually, U.S. farmers prospered during a commodity boom that lasted from 2006-13, with record corn, soybean, and wheat prices in 2013. The boom was driven by unexpected crop shortfalls globally, rising demand for food, and biofuel fever. It collapsed when bumper crops were harvested worldwide. U.S. farm income, down sharply from its peak during the boom, is now running at levels seen before the once-in-a-generation string of good years.
At the trend-setting Chicago futures market, the price of corn for delivery in December fell by 2 percent on Wednesday. November soybeans were down by 3 percent and September wheat by 4 percent.
Soybean prices have tumbled by more than $2 a bushel, or 20 percent, since late May because of tit-for-tat tariffs on U.S. and Chinese products. Corn and wheat futures are down by 8 percent. Soybeans are the largest farm export to China, worth $14 billion last year, and are a prime target of Chinese duties. On Tuesday, the Trump administration said it would place tariffs on an additional $200 billion worth of Chinese goods because of Chinese duties imposed in response to U.S. tariffs on high-tech products imported from China. Before that, China and the United States traded tariff volleys over steel and aluminum. China said it will counter the new round of tariffs.
The administration’s new tranche of tariffs “appears reckless and is not a targeted approach,” said Senate Finance Committee chairman Orrin Hatch.
U.S. growers have lost more than 183 million bushels of soybean exports to China during the ongoing trade dispute and are on track for a 23 percent decline in shipments to the world’s most populous nation, said economist Veronica Nigh of the American Farm Bureau Federation.
The president of COFCO, China’s state grain trader, said in a People’s Daily interview that China can offset the higher-priced U.S. soybeans by increasing imports from South America, reported Reuters. Yu Xubo said other sources of vegetable oil and meal could be tapped, including rape and sunflower seeds and soy, rape, sunflower, and fish meal. Meat imports could be increased as well. Soybeans are a major component of livestock feed.
China buys 65 percent of the soybeans sold on the world market. The United States accounts for one-third of those imports. Rabobank estimates that despite its 25 percent tariffs, China will need to buy 550 million bushels of U.S. soybeans, because there aren’t enough soybeans elsewhere in the world. The country “can hardly switch to new suppliers overnight,” said the New York Times. “China is pressing its own farmers to grow more. But the math is daunting, and the obstacles are formidable.”