One-third of U.S. agricultural trade flows through Canada and Mexico, and both nations quickly vowed tit-for-tat tariffs on U.S. food and ag products after President Trump announced duties on steel and aluminum from the North American neighbors on Thursday. The National Farmers Union, expressing a sentiment shared by other U.S. farm groups, said that “provoking a global trade war with our closest allies hardly seems like a solution” to trade deficits and complaints of unfair tactics overseas.
“Global export uncertainty has resulted in considerable lost value for U.S. pork producers,” said Jim Heimerl, president of the National Pork Producers Council. Kevin Skunes of the National Corn Growers Association urged lawmakers and the administration “to strengthen cooperation with our trading partners and stay at the negotiating table” to avoid permanent loss of exports, which generate 20 cents of each $1 of farm income.
Acting in the name of national security, Trump signed proclamations that set tariffs of 25 percent on steel and 10 percent on aluminum imported from Canada, Mexico, and the European Union. Two days earlier, Trump decided on 25 percent tariffs on $50 billion worth of Chinese products “containing industrially significant technology,” with the list of specific imports to be announced by June 15. Senior U.S. and Chinese officials are to begin trade talks this weekend to flesh out an agreement under which China would buy more U.S. ag exports.
“This announcement opens the floodgates to billions in new tariffs on American agriculture,” said Farmers for Free Trade, an advocate of larger exports and “beneficial” trade agreements. “These tariffs will harm U.S. farmers and take many American farm operations to the breaking point. … American farmers overwhelmingly supported President Trump in 2016 but will not be silent in the face of trade wars that harm U.S. agriculture.”
Rural America is Trump country, the pivotal voting bloc in his election and a continuing base of support. Senate Agriculture chairman Pat Roberts said he reminded Trump during a White House meeting on trade, “We’re the people who brought you home.”
After the White House announced the tariffs, Roberts tweeted, “Time and time again I have voiced my concerns on steel and aluminum tariffs and the damage they will cause across many sectors of the economy. Agriculture in particular is likely to face harm from retaliatory action and the uncertainty that comes with it. … The U.S. and China must work to resolve these issues and provide our producers with open, fair, and reliable markets.”
Agriculture is a consistent bright spot in the U.S. balance of trade because it always registers a surplus; this year’s is forecast at $21 billion. Trump has focused on erasing trade deficits, particularly in the manufacturing sector.
The European Union said it would challenge the U.S. tariffs at the World Trade Organization today as a violation of rules against unfair trade barriers. The 28-nation EU will decide shortly whether to “rebalance the situation” with new duties on U.S. products that include corn, rice, peanut butter, whiskey, tobacco, clothing, and steel and aluminum.
“As President Trump has made clear, he will not allow American agriculture to bear the brunt of retaliatory tactics,” said a USDA spokesman. “At the same time, USDA continues to work to expand existing markets and open new ones for American agricultural products in the global marketplace.”
The spokesperson was apparently referring to Trump’s direction to Agriculture Secretary Sonny Perdue in early April to draft a plan to protect U.S. agriculture from unfair trade sanctions. Perdue has kept the details of any such plan under wraps. Farm leaders say $15 billion is available.
Mexico said it would impose “equivalent measures,” beginning today, on a range of U.S. products, including steel, lamps, pork legs and shoulders, sausages, apples, grapes, blueberries, and various cheeses. The economic ministry said the “U.S. protectionist measures” were unjustified. Mexico is the No. 1 market for U.S. pork exports.
Canadian Prime Minister Justin Trudeau said the U.S. tariffs “are totally unacceptable” to a long-time ally. “As we have consistently said, we will always protect Canadian workers and Canadian interests.” Canada unveiled two lengthy lists of potential targets for tariffs. Steel products would be subject to a 25 percent tariff, while 10 percent tariffs would be assigned to foods, including beef, yogurt, whiskey, pizza, sparkling water, and jams and jellies, along with pesticides, toilet paper, motorboats, lawn mowers, and aluminum plate, tube, and wire. The tariffs would take effect on July 1.
“We had strong hopes this situation would be averted permanently, but it now appears we need to prepare for retaliation and its direct impact on U.S. farmers,” said export-promoter U.S. Grains Council. The U.S. Meat Export Federation said, “It is especially frustrating to see U.S. pork caught up in a dispute that has nothing whatsoever to do with pork trade.”
China is the largest market for U.S. farm exports, followed by Canada, Mexico, and the European Union. Canada is forecast to spend $21.2 billion and Mexico $19.4 billion on U.S. ag products this year. In turn, Mexico is projected to send $24.7 billion and Canada $23.2 billion in food and ag goods to U.S. buyers, according to the USDA.
To read the White House announcement of the tariffs, click here.
For a White House fact sheet on the tariffs, click here.