With the trade war stunting U.S. farm exports after two years of growth, President Trump said he has asked China to remove its retaliatory tariffs on U.S. food and ag exports. Trump announced the request on the same day four large farm groups opened their annual meetings with a joint endorsement of the new North American trade pact negotiated by the White House.
Farmers are strong supporters of Trump, who delivered on campaign promises of tax and regulatory relief, but they are free traders who see 25 cents or more of each $1 in receipts from exports. For months, ag leaders have called quietly for removal of tit-for-tat tariffs and for faster action on agreements to replace TPP and NAFTA. “This use of tariffs results in retaliation,” with agriculture as the first target, said Senate Agriculture chairman Pat Roberts last week.
Late on Friday, Trump said on social media that he asked for removal of ag tariffs “based on the fact that we are moving along nicely with Trade discussions … and I did not increase their second traunch (sic) of Tariffs to 25% on March 1st. This is very important for our great farmers — and me!” There was no immediate response from China. The United States has imposed tariffs on more than $250 billion in Chinese products and China has put duties on $110 billion of U.S. goods.
Agriculture Secretary Sonny Perdue said U.S. ag exports to China could double or triple if there is a successful conclusion to U.S.-China negotiations that began in December. Trump is expected to meet Chinese President Xi Jinping in the near future for face-to-face talks that could end “successfully or very detrimentally” for the farm sector, Perdue said, according to DTN/Progressive Farmer. Perdue met reporters after speaking at the Commodity Classic, where corn, soybean, wheat and sorghum groups meet annually to set policy.
The corn, soybean, wheat and sorghum groups issued a joint statement of support for the United States-Mexico-Canada Agreement, as the NAFTA successor is known. The groups said their members will ask lawmakers to vote for the USMCA and they asked the administration to keep NAFTA in force until the USMCA is ratified. Ag exports, for the most part, are guaranteed duty-free entry to Canada and Mexico under NAFTA and would face tariffs otherwise. Canada and Mexico are the two largest customers for U.S. farm exports.
Some analysts are dubious that China, the No. 1 customer for U.S. food and ag before the trade war at $21 billion a year out of total U.S. sales of $140 billion, could meet those targets without difficulty, or that the United States could generate that volume of goods unless it greatly expanded farm production or cut off other traditional customers. For example, half of the U.S. soybean crop usually is exported and in the past, China bought 60 percent of it.
Perdue said “a pretty broad swath” of U.S. commodities, including grain, soybeans, sorghum, rice, beef, livestock, ethanol and so-called DDGs, a feed additive that is an ethanol co-product, could be part of a Chinese commitment to buy more U.S, exports. According to reports, China has offered to buy $30 billion of American ag exports to help reduce its trade surplus with the United States.
China committed to buy 10 million tonnes of U.S. soybeans during a White House meeting with Trump, tweeted Perdue on Feb 22. Exporters did not report to USDA any major soybean sales to China in the week that followed. Although Chinese buyers “were said to be in the U.S. market on March 1 asking for offers, traders familiar with the process said no deals have been done,” reported Bloomberg.
U.S. farm exports are forecast by USDA for $141.5 billion this fiscal year, down 1 percent from the $143.4 billion of 2018. Exports crested at $152.3 billion in 2014, as the commodity boom ended, tumbled to $129.6 billion in 2016 and then recovered for the next two years. The sales tally in 2018 was the second-highest ever.