On Monday, President Trump noted that ongoing trade turbulence with China could adversely impact U.S. agricultural producers already hampered by a sluggish U.S. farm economy. The President has asked the U.S. Department of Agriculture for options to assist farmers negatively impacted by the recent trade developments. Meanwhile, Secretary of Agriculture Sonny Perdue faced questions from farm state lawmakers about trade issues, and potential responses, at a Senate hearing on Wednesday morning.
Today's update includes a brief explanation of recent trade tariff action taken by the U.S. and China. The trade uncertainty unfolds as agricultural producers anticipate another year of stagnant farm income, and while robust production of corn and soybeans in recent years has made exports an important component of demand. Overall, USDA has noted that agricultural exports account for 20 percent of U.S. farm income. Meanwhile, President Trump has instructed Secretary of Agriculture Sonny Perdue to "implement a plan to protect our farmers and agricultural interests" as the trade tussle continues.
Since withdrawing from the Trans-Pacific Partnership on his first working day in office, and formally opening the North American Free Trade Agreement to the renegotiation process, President Trump's rhetoric on trade has perhaps caused more anxiety among agricultural producers than actual executive branch action. However, implementation of concrete trade policy from the Administration began to emerge in January of this year when the U.S. slapped tariffs on imports of solar panels and washing machines.
A recent report from CoBank pointed out that trade worries are clouding the economic outlook for U.S. farmers and ranchers. And, a recent report from Purdue University demonstrates that potential trade retaliation measures on U.S. soybeans by China could be costly. Today's update looks briefly at these two reports, as well as other news articles that highlight ongoing trade issues in the farm sector.
Charles Clover, Lucy Hornby and James Kynge reported on Friday at The Financial Times Online that, "Beijing signalled its readiness to go toe-to-toe with US President Donald Trump’s campaign of tariffs against China on Friday, proposing new levies on 128 American imports that heightened market fears of a looming trade war between the world’s largest economies. China’s response to Mr Trump bore the hallmarks of a carefully calibrated warning. Beijing said it was planning tariffs on about $3bn in imports, including a 15 per cent tariff on US steel pipes, fresh fruit and wine, and a 25 per cent tariff on pork and recycled aluminum."
The Wall Street Journal reported on Wednesday that, "China is preparing to hit back at trade offensives from Washington with tariffs aimed at President Donald Trump’s support base, including levies targeting U.S. agricultural exports from Farm Belt states, according to people familiar with the matter."
On Thursday, President Trump implemented tariffs on steel and aluminum, an action that had been anticipated since last week. Today's update explores recent news items that highlight the potential negative impact the executive branch action could have on the U.S. farm sector. Although Canada and Mexico were exempt from the new tariffs, if other countries, particularly China, take retaliatory trade measures based on U.S. trade policy, negative short-term and long-term impacts could be expected for U.S. farmers.
Wall Street Journal writer William Mauldin reported on Monday that, "President Donald Trump on Monday sought to use his threat to slap tariffs on steel and aluminum imports as leverage to extract concessions from North American trading partners, while his party’s congressional leaders worked to derail a proposal that they said could spark a trade war."
A FarmPolicyNews update last month discussed executive branch implementation of U.S. import tariffs on solar panels and washing machines, as well as the possibility of future implementation of import barriers on steel and aluminum. That update also included a look at the potential of retaliatory measures, particularly by China, that could have a negative impact on U.S. agricultural exports and farm income. On Thursday, President Trump signaled that he plans to levy the tariffs on steel and aluminum imports soon. Today's update looks at recent news items that highlight the negative impact trade retaliation measures could have on U.S. agriculture if the President follows through on his import tariff promise.
Today's update looks at recent USDA trade highlights from calendar year 2017, and then turns to USDA's export projections for corn and soybeans in the 2018-19 marketing year.