At the same time he threatened an additional $100 billion in tariffs on China, President Trump said on Thursday that the government will use its broad powers to protect U.S. farmers and agricultural interests from “China’s unfair retaliation.” The administration provided no immediate details about the aid or how much it would cost.
Futures prices for corn and soybeans, the two most widely planted and valuable U.S. crops, fell sharply in response to U.S. escalation of the trade dispute. The Trump administration unveiled $50 billion in potential tariffs on Chinese technology products on Tuesday, saying that China had engaged in intellectual property theft. On Wednesday, Beijing responded with a list of $50 billion in proposed retaliatory tariffs. U.S. soybeans, corn, wheat, cotton, sorghum, beef, whiskey, tobacco, and orange juice are at the top of the list.
“Rather than remedy its misconduct, China chose to harm our farmers and manufacturers,” Trump said in directing U.S. trade representative Robert Lighthizer, “in light of China’s unfair retaliation,” to consider an additional $100 billion in duties. “I have also instructed the Secretary of Agriculture, with the support of other members of my cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests.”
“America’s farmers would vastly prefer to hitch their wagons to the export opportunities offered by trade,” said a spokesman for the American Farm Bureau Federation, the largest U.S. farm group. “The economic value of our exports would be difficult to match, and we need to hear additional details from the administration.”
Food and ag exports provide 20 cents of each $1 in net farm income. Agriculture is one of the few U.S. economic sectors to consistently post a trade surplus, forecast this year at $21 billion, on exports of $139.5 billion and imports of $118.5 billion.
It was the second time in two days that Trump said he would not allow farmers to be casualties of the dispute. Farm groups and their friends in Congress say agriculture traditionally is first in the line of fire when trade wars begin. Corn and soybean futures prices plummeted when China announced its proposed tariffs. Prices recovered most of their losses on Thursday but started falling again amid market turmoil. Soybeans, the largest U.S. export to China, lost 12 cents a bushel in the four hours after Trump’s statement.
“The administration stands ready to defend agricultural producers who may be harmed,” said Agriculture Secretary Sonny Perdue. “As we take a stronger approach to the way we handle trade as a nation, we will use all of our authorities to ensure that we protect and preserve our agricultural interests.”
Perdue aides were not immediately available to say what steps were under consideration.
When China unveiled its list of U.S. farm targets, Iowa Sen. Chuck Grassley said the administration was obliged to mitigate whatever damage it causes through its actions on trade.
Senate Agriculture chairman Pat Roberts suggested Congress might create a “Trump tariff payment” to compensate U.S. producers for lost sales. “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,” he said last month. Roberts aims to draft the new farm bill later this month.
During a farm tour of Ohio, Perdue said “some extraordinary measures” may be written into the farm bill to assure that farm safety is adequate “in the context of current events,” said Politico.
Earlier on Thursday, White House spokesman Hogan Gidley said Trump “is the best negotiator on the planet” and that the China-U.S. dispute was in a “negotiating stage. Nothing has been enacted,” Gidley said when reporters asked about the impact volatile market prices and uncertainty about exports could have on rural America.
“We’re talking to the agricultural community. You know we want to help them,” he said, adding that Trump would use “all means and methods to protect this country and to protect the workers and the businesses in America.”
Despite the threat of new tariffs, Trump said the administration “is still prepared to have discussions in further support of our commitment to achieving free, fair, and reciprocal trade, and to protect the technology and intellectual property of American companies and American people.”
The $50 billion in U.S. tariffs could take effect in late May. China has said that implementation of its $50 billion in duties would depend on the U.S. decision.
In response to U.S. tariffs on imported steel and aluminum that took effect at the end of March, China imposed a 25 percent tariff on U.S. pork and a 15 percent tariff on ethanol, apples, and almonds. Pork sales to China are worth more than $1 billion a year but are expected to dry up due to the tariff.