Trade

Today’s update explores recent news articles that discuss the impacts of the U.S., China trade dispute, with a focus on how farmers are reacting to ongoing tariffs.  In addition, midlevel talks between the U.S. and China have been scheduled as the two countries began to prepare for their first major negotiation in more than two months.

U.S. farmers are anxious for details on the trade assistance package the administration announced in July.  Press reports indicate that program guidelines could be issued by August 24th.  Meanwhile, business news articles and USDA data continue to shed light on agricultural export variables as the ongoing trade dispute with China continues.

Keith Bradsher and Cao Li reported in Saturday’s New York Times that, “China threatened on Friday to tax an additional $60 billion a year worth of imports from the United States if the Trump administration imposes its own new levies on Chinese goods. The threat comes just two days after President Trump ordered his administration to consider increasing the rate of tariffs it has already proposed on $200 billion a year of Chinese goods — everything from chemicals to handbags — to 25 percent from 10 percent.”

Although news reports indicate that the new Chinese duties “is leaving the farm largely unscathed,” ongoing concerns about the trade war persist, particularly as it relates to U.S. soybean exports.

Agricultural trade issues continue to garner a substantial amount of media attention.  The Commerce Department noted on Friday that surging U.S. soybean exports, spurred by the anticipation of Chinese tariffs, contributed to strong second quarter GDP growth.  Meanwhile, President Trump touted an agreement with the EU to purchase more U.S. soybeans, although a subsequent report pointed out that the accord fell short of addressing broader agricultural trade disputes.  Nonetheless, on Sunday’s “Face the Nation” television program, Larry Kudlow, President Trump’s economic advisor, indicated that broad discussions on agriculture will be part of the bilateral talks wth the EU.

A news release from USDA on Tuesday stated that, “U.S. Secretary of Agriculture Sonny Perdue today announced that the [USDA] will take several actions to assist farmers in response to trade damage from unjustified retaliation. President Trump directed Secretary Perdue to craft a short-term relief strategy to protect agricultural producers while the Administration works on free, fair, and reciprocal trade deals to open more markets in the long run to help American farmers compete globally. Specifically, USDA will authorize up to $12 billion in programs, which is in line with the estimated $11 billion impact of the unjustified retaliatory tariffs on U.S. agricultural goods. These programs will assist agricultural producers to meet the costs of disrupted markets.”

Several recent news articles have discussed tariffs on U.S. agricultural exports and the impacts these policies are having on global commodity markets.  As the effects of trade policies ripple through the agricultural sector, a separate set of news items have highlighted how politicians and farmers are reacting to the impacts.  Today’s update provides an overview of these news stories.

As the impacts of the ongoing U.S.-China trade dispute continue to unfold, a report last week from the U.S. Department of Agriculture provided some insight into how the Chinese tariffs are affecting soybean markets.  Today’s update looks at news reports that discuss trade issues and the USDA report in greater detail.

The Food and Agriculture Organization of the United Nations (FAO) recently published its biannual Food Outlook report that provides short-term forecasts for commodity production, trade and prices.  Also this week, the U.S. Department of Agriculture updated its monthly trade database which provided more insight into agricultural trade prospects for this fiscal year.  Meanwhile, recent news articles continue to focus on U.S. soybeans and the potential impacts of Chinese tariffs on exports.  Today’s update looks briefly at each of these three items.

Don Lee reported on the front page of Saturday’s Los Angeles Times that, “The tariffs that the United States and China slapped on each other’s exports Friday intensified a trade battle that has a strong risk of roiling financial markets, chilling consumer confidence and seriously harming the global economy…Soybeans topped the list of newly taxed items— and they illustrate how deeply U.S. and Chinese producers and consumers have come to depend on each other.”

Bloomberg writer Andrew Mayeda reported Thursday that, “President Donald Trump is preparing to slap tariffs on Chinese goods early Friday, the first shot in a trade war between the world’s two biggest economies. Tariffs on $34 billion of Chinese goods are scheduled to take effect at 12:01 a.m. in Washington, the U.S. Trade Representative confirmed in an email Thursday. The milestone marks a new and damaging phase in a conflict that has roiled markets and cast a shadow over the global growth outlook.”

News articles over the past several days have highlighted heightened U.S. trade policy risks and recent declines in the price of corn and soybeans.  Farm state Senators expressed their concern regarding executive branch trade policy, and its impact on the U.S. agricultural sector, to Commerce Secretary Wilbur Ross at a recent Finance Committee hearing.  Meanwhile, Secretary of Agriculture Sonny Perdue indicated in a recent opinion column that, “The U.S. has to stand up to China’s abusive trade practices like intellectual property theft.  And we won’t leave farmers to face Chinese bullying alone.”

In conjunction with positive early season crop condition ratings, an ongoing and escalating trade dispute between the U.S. and China put negative pressure on corn and soybean prices Tuesday.  Meanwhile, The Wall Street Journal indicated that the administration is ‘working on measures that will have the backs of farmers,’ as the trade dispute unfolds.  Separately, farm state lawmakers stressed the importance of global markets for agricultural producers, who have already been struggling with lean farm income.

Bloomberg News reported on Friday that, “Trade tensions between the U.S. and China ratcheted higher after the Asian nation said it will follow through on plans to levy tariffs on a range of American farm goods including soybeans and corn.”

Over the past several days, the U.S. Department of Agriculture has released a handful of updates relating to U.S. agricultural trade.  The recent information includes updated projections for fiscal year 2018 agricultural exports, as well as the latest monthly trade data.  As trade policy uncertainty persists, today’s post provides a brief overview of the recent trade information.

Towards the end of May, positive news regarding U.S. trade policy began to emerge for U.S. farmers: China canceled its anti-dumping measure on U.S. sorghum imports; the U.S. issued a  joint statement indicating that China would purchase more U.S. exports, including “meaningful increases” in agricultural products; and, the U.S. suspended its threat to impose tariffs on $150 billion in Chinese imports while negotiations with China continued.  However, more recent trade developments appear to be less sanguine for U.S. farmers and ranchers, which is the subject of today’s update.

Late last week China canceled its anti-dumping measure on U.S. sorghum imports. Meanwhile, after two days of trade talks in Washington, D.C., China and the U.S. issued a vague joint statement indicating that China would purchase more U.S. exports, including additional agricultural and energy products.  And on Sunday, Members of the President’s Cabinet provided conflicting perspectives on whether the U.S. would move forward on implementing tariffs on Chinese imports. However, news reports Monday indicated that the tariffs had been “suspended.”