The USDA began preparing for a trade war with China last fall, before President Trump confronted Beijing over unfair practices or imposed tariffs on Chinese imports, said Agriculture Secretary Sonny Perdue on Tuesday. Perdue said he would prefer a speedy settlement of the tit-for-tat battle of tariffs, but, “It’s really up to China.”
During a broadcast interview, Perdue said the administration recognized from the start that agriculture would be a first-round Chinese target so he was instructed last year to draw up a plan to mitigate the impact on the sector. “There will be some,” he said. “[Farmers] can’t pay the bills with patriotism and that is what we hope to cure.” An estimated $1 of every $7 in farm exports is at risk in “the trade disruptions we are experiencing.”
“That sounds very passive,” said Mike Allen of Axios, who conducted the interview. “In fact, it’s your president, your administration, that is disrupting trade.”
“I still describe it as the trade disruptions we are experiencing and they understand that,” replied Perdue.
Perdue has dropped hints off and on of USDA’s preparations. Several weeks ago, he told reporters that the budget deal approved by Congress last winter included a provision that expanded his authority to shift money among accounts. He has refused to discuss the format that trade-war aid would take. There is talk on Capitol Hill that up to $30 billion could be expended. The secretary says he will decide around Labor Day if action is needed.
“I hope we can get this resolved prior to six months, all the trade issues,” he said, including the new NAFTA, when Allen asked what the situation would be in half a year. “It’s really up to China” to reform its practices.
Ron Kirk, who was U.S. trade representative during the Obama era, told Allen separately, “I really feel for our farmers because they paid a price for this tariff foolishness.”
“Markets are lost already. Don’t say forever,” said Iowa Sen. Chuck Grassley during a tele-conference. “We can win these back again.” The USDA estimated last week that U.S. soybean exports would fall by 250 million bushels annually because of the Chinese tariffs.
Earlier on Tuesday, Japan and the European Union, accounting for one-third of the global economy, signed a trade agreement that eliminates tariffs on almost all of the goods they sell to each other. The agreement includes openings for EU farm and fishery products in Japan’s consumer market. “We are sending a clear signal that we stand together against protectionism,” said European Council president Donald Tusk.
A former U.S. trade official, Wendy Cutler, told The Japan Times that the agreement will reduce Japanese reliance on the U.S. market. Japan and the EU hope to ratify the agreement so it comes into effect in March 2019. Japan also is part of the so-called TPP11 nations who agreed to a free-trade agreement after Trump withdrew the United States from the Trans-Pacific Partnership.
Japan is the fifth largest market for U.S. farm exports. The four largest customers – China, Canada, Mexico and the EU – have imposed tariffs on an array of U.S. goods, including food and agriculture products, in response to U.S. tariffs on imported steel and aluminum.
To watch a video of the Axios interview with Perdue, click here.
For a Nikkei Asian Review description of the Japan-EU pact, click here.