President Trump sent a message to U.S. farmers in a phone call with Agriculture Secretary Sonny Perdue: “We’re not going to allow them to be casualties if this trade dispute escalates. We’re going to take care of our American farmers.” Still, the administration did not specify what those protections might be.
The National Farmers Union said it feared there was no plan in place to offset China’s threat of 25 percent tariffs on 106 U.S. products, with soybeans, corn, cotton, wheat, sorghum, beef, whiskey, tobacco, and orange juice at the top of the target list. Beijing said that implementation of the tariffs would depend on what the Trump administration does with its $60 billion of proposed tariffs on Chinese products. “Farmers are dealing with severely depressed farm prices and a 12-year low in farm income, and a trade war will undoubtedly make those conditions worse,” said NFU president Roger Johnson.
“If these tariffs actually come into play, it’s going [to be] concerning to our farmers,” said Perdue during a news conference on Wednesday near Lima, Ohio.
“But I talked to the president as recently as last night. And he said, ‘Sonny, you can assure your farmers out there that we’re not going to allow them to be the casualties if this trade dispute escalates. We’re going to take care of our American farmers. You can tell them that directly.’ ”
The chairman of the Senate Agriculture Committee, Pat Roberts of Kansas, suggested last month that Congress might create a “Trump tariff payment” to compensate U.S. producers for lost sales. A Roberts spokeswoman was not immediately available to say if the idea was being considered. At a Senate Finance Committee hearing on March 22, Roberts pointed to the risk of countermeasures by China and other nations to U.S. tariffs against unfair practices. “If we have to go down the road with a special payment with regard to retaliation, that just adds another dust-up right before the farm bill,” he said.
“If the federal government takes action on trade that directly results in economic hardship for certain Americans, it has a responsibility to help those Americans and mitigate the damage it caused,” said Iowa Sen. Chuck Grassley, who said he was working on potential actions to defend farmers and U.S. trade rights. During a teleconference on Tuesday, Grassley said federal crop subsidies may come into play if market prices, already in a rut, turn sour for a long period. That would be one way to provide some financial relief.
China is the largest customer for U.S. ag exports, and soybeans are the top commodity, worth roughly $14 billion a year. China generates $1 in every $6 paid for U.S. farm exports, which are forecast to total $139.5 billion this year.
Groups ranging from the American Farm Bureau Federation to cotton, beef, soybean, and wheat growers urged the White House to negotiate a settlement to the dispute with China. “The Trump administration has until the end of May to resolve this issue,” said the National Cattlemen’s Beef Association, referring to the timeline set by U.S. trade representative Robert Lighthizer for a decision on U.S. tariffs against China.
Said Farm Bureau president Zippy Duval, “We know markets ebb and flow. But 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.”
“We may have a little short-term pain. But we certainly are going to have long-term success, and we are focused on long-term economic principles and making sure we have a strong and stable economy,” said White House press secretary Sarah Sanders, in response to a question about whether Trump’s “saber rattling” would cost Americans money. If China does not reform policies that the United States views as aiding the theft of intellectual property, Sanders said, “then we would move forward” with the new round of tariffs.
The United States imposed a 25 percent tariff on steel and aluminum imports at the end of last week. China responded early this week with levies on U.S. goods that include pork, apples, wine, and ethanol.
Farmers voted overwhelmingly for Trump in 2016 because of his promises of regulatory relief, tax reform, and support for corn ethanol. Farm groups hoped he would moderate his harsh views on trade, such as pledges to withdraw from the 12-nation Trans-Pacific Partnership and scrap NAFTA if he could not get a better deal.
A trade war with China, with agriculture as a front-line casualty, could turn rural voters against Trump and Republican candidates in the mid-term elections, said the policy director for the small-farm advocate Center for Rural Affairs in Lyons, Nebraska, in a Bloomberg interview. “This could be what puts the picture together,” said policy director Johnathan Hladik.
The dispute with China could undo one of Trump’s first victories for agricultural trade. Ten months ago, China opened its market to U.S. beef, ending a 13-year ban. Perdue traveled to the country last June for a celebration and was joined by U.S. ambassador Terry Branstad, the former governor of Iowa, for the ceremonial cutting of a Nebraska-raised prime rib at a Beijing hotel.
To read the list of products threatened by Chinese tariffs, as translated by CNBC, click here.