Farmers are worried about foreign retaliation to U.S. trade sanctions, said the chairman of the Senate Agriculture Committee, suggesting that Congress may have to create a “special payment due to retaliation.” According to a staffer, Chairman Pat Roberts said the compensation might be called a “Trump tariff payment.”
Roberts raised the idea just hours before President Trump proposed 25 percent tariffs on a range of Chinese goods on grounds of intellectual-property theft. The tariffs were announced on the day before steep U.S. tariffs on steel and aluminum imports were due to go into effect. Farm groups say either case could provoke barriers to farm exports. The fears are especially pronounced with China, the No. 1 customer for U.S. farm goods.
The New York Times reported Friday that China planned to “impose tariffs on $3 billion worth of American-produced fruit, pork, wine, seamless steel pipes, and more than 100 other goods.” The list did not mention soybeans or electronic products, “leaving open the possibility that they would be hit by another wave of Chinese retaliation in reaction to Mr. Trump’s latest tariffs, or set the stage for negotiations to avert a trade war,” the Times said.
“Every time we take a trade action, agriculture is in the crosshairs,” U.S. Trade Representative Robert Lighthizer said during a Senate Finance Committee hearing when farm-state senators expressed their concerns about potential damage to ag exports. Soybeans, one of the two largest U.S. exports to China, “are a real problem,” he agreed. However, he said, the United States must stand up for its rights in world markets despite the risk of a counter-action by a trade adversary.
Disruptions in the export market would add to the misery of wheat farmers, said Roberts, a Kansas Republican. This year’s winter wheat crop is already imperiled by drought, and a global grain glut has depressed commodity prices. Difficult negotiations for a new NAFTA have eroded the reputation of the United States as a reliable supplier to the point that Mexico, the No. 3 customer for American food and ag exports, bought wheat from Argentina and corn from Brazil in the past year.
“We’re in a dire fix,” said Roberts. “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.”
During the hearing, at least four other senators — Debbie Stabenow of Michigan, Chuck Grassley of Iowa, Michael Bennet of Colorado and John Thune of South Dakota — called attention to the importance of agricultural exports, which generate 20 percent of farm income. Farmers “don’t need sympathy,” Bennet told Lighthizer. “They need the administration to act responsibly.”
Grassley asked if the threat of U.S. withdrawal from NAFTA was over. “No,” replied Lighthizer. The eighth round of negotiations is scheduled for early April in Washington. In opening remarks, Lighthizer said that “substantial progress is being made” in the talks, though he admitted that Congress might not vote on a new NAFTA this year.
The National Farmers Union, the second-largest U.S. farm group, said the administration was taking a “bull in the china shop” approach to international trade. “In the case of China, significant export markets are likely to be the first casualty,” said NFU president Roger Johnson. “The president must have a plan in place to protect family farmers before seeking to remedy unfair trade practices.”
Two wheat groups, the National Association of Wheat Growers and export promoter U.S. Wheat Associates, said unilateral U.S. tariffs could invite retaliation by China against U.S. soybeans, wheat, corn, and other commodities, “which would cut into already unsustainable farm incomes.”
The White House said that in two weeks it would publish a proposed list of Chinese targets for U.S. tariffs, with a final list to be issued after a review of public comments. It also will pursue trade complaints against China with the World Trade Organization, and the Treasury Department will restrict Chinese investment in sensitive U.S. technology.
To watch a video of the Finance Committee hearing or to read Lighthizer’s written statement, click here.
A White House statement on the tariffs is available here.
President Trump’s memorandum on Section 301 tariffs on Chinese imports is available here.
To read the remarks of the president and other administration officials at the signing of the memorandum, click here.