With a warning against retaliation that targets “our farmers or other industries,” President Trump ordered a new wave of tariffs on Chinese products, this time on $200 billion of goods that will face a 10 percent duty initially and rise to 25 percent on Jan. 1. “Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices,” said Trump, suggesting he and Chinese President Xi Jinping could end the trade war through face-to-face negotiations.
Farm groups have urged the administration to remove the tariffs or to find alternative markets for U.S. farm exports, which generate more than 20 percent of farm income. The USDA estimates the trade war will reduce farm exports to China, formerly the No. 1 customer, by 45 percent. Sales of $21.8 billion in fiscal 2017 to China will dwindle to $12 billion in fiscal 2019, it says, but the overall U.S. export figure will edge upward thanks to larger sales of wheat and horticultural products.
After laying out the timetable for an increase in the new tariffs, Trump said, “Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”
China was expected to reject trade talks with Trump if the president invoked additional tariffs, two sources told Bloomberg ahead of the U.S. announcement. China previously said it would retaliate if the new tariffs were enacted.
Ethanol producer Green Plains Inc. is shutting down two plants in Iowa and reducing output at a Minnesota plant because of low profit margins, reported Reuters, citing industry sources. “The production cuts come after the Trump administration’s escalating trade disputes cut off U.S. access to ethanol markets in China, contributing to a domestic supply glut that has pushed biofuel prices to near their lowest in over a decade,” said the news agency. More than 35 percent of the U.S. corn crop is used in making the biofuel.