Negotiations didn’t work, so the Trump administration is relying on the economic discomfort of tariffs to force China to change its trade practices, said Commerce Secretary Wilbur Ross on Wednesday. Farm-state senators said U.S. producers already suffer from tit-for-tat retaliation and that there is a risk of the long-term loss of export markets as the dispute escalates.
“That’s the problem,” said Kansas Sen. Pat Roberts during a Senate Finance Committee hearing. In response to U.S. tariffs on imported steel and aluminum, Mexico is buying wheat from Argentina and corn from Brazil instead of its longtime supplier, the United States. “We may be in the situation where we would lose that market,” Roberts said. The U.S. Meat Export Federation said retaliatory Mexican tariffs on U.S. pork could reduce exports by 60,000 tonnes and cost the pork industry $300 million through the end of 2018.
Ross blamed plunges in commodity prices on “antisocial” speculators and profiteers. Markets will stabilize at higher levels, he said, because China has few alternatives for imports such as soybeans. The news agency AgriCensus said premiums for Brazilian and Argentinian soybeans surged 50 percent in the past week as Chinese buyers looked to avoid potential U.S. tariffs.
At the White House, President Trump told lawmakers, “Now we’re making very good trade deals. Well, you’ll be seeing that. They’ll be announced pretty rapidly. We already have a couple that are made.” He provided no details
The administration imposed steel and aluminum tariffs worldwide to prevent China from dumping steel, and it is prepared to impose stiff tariffs on high-tech products from China as a way to stop the theft of intellectual property. The 25 percent tariffs on $50 billion in high-tech goods are due to take effect on July 6.
“We tried negotiations. The president concluded we needed more than negotiations,” said Ross. “If we don’t make it more painful … it is unlikely we will succeed.”
Iowa Sen. Chuck Grassley pointed to a steep decline in soybean futures prices since the end of May as evidence that “the impact of the proposed tariff is getting very real.” He referred to China’s threat of tariffs on U.S. farm and manufactured goods that would be equal in size to the U.S. package.
“As you know, the president has directed the Secretary of Agriculture to use every power at his disposal to help the American producers that are adversely affected by retaliation,” said Ross.
“I don’t think you’re going to have any backstop for our farmers and ranchers,” said Colorado Sen. Michael Bennet when Ross said questions about assistance should be directed to Agriculture Secretary Sonny Perdue, who has said it would be counterproductive to describe an aid package in advance, since a trade adversary could then circumvent it. In the spring, there were rumors that $15 billion in support would be available to farmers.
There is serious concern in farm country about restricting access to markets rather than expanding export markets, said South Dakota Sen. John Thune. “With every passing day, the United States loses market share.” Grassley and Roberts have also supported agricultural trade over federal aid.
To watch a video of the hearing or to read statements by Ross and Finance Committee leaders, click here.
For a White House report on “China’s economic aggression,” click here.