Farm aid comes as tariff war casualties pile up

In a great relief to American farmers, President Donald Trump announced a $16 billion bailout to offset the damage from the 10-month tariff wars with China. That’s in addition to the $12 billion he authorized last year.

But the news came bittersweet. This second bailout means the battle between President Trump and China President Xi Jinping is intensifying.

Talks to finalize a deal failed in early May. Trump reacted by hiking tariffs on Chinese goods – again.  Xi retaliated in kind – again.

Trump is set to slap trade taxes on all Chinese imports – totalling about $325 billion. Xi will retaliate, Chinese state news reports indicated.

Farmers grateful, but…

Farmers reacted with gratitude for the aid but called on the White House to seal a deal. Markets are being lost. Material costs are skyrocketing. Opportunities are about to slip away.  

“What would help my farm even more was if we had an endgame for the trade war,” Montana wheat farmer and U.S. Senator Jon Tester said on Face the Nation. “This is a problem that was created by the president, and now the U.S. taxpayer is going to fork out $16 billion to try to make things OK.”

Zippy Duvall, president of American Farm Bureau Federation, said the aid is needed but is a drop in the bucket compared to the losses suffered and more to come.

“That’s a lot of money but it doesn’t come close to what our farmers could potentially make in the market if we had a trade deal with China and finished up some other deals around the world,” Duvall told Fox Business News.

Roger Johnson, president of the National Farmers Union, said the ongoing trade wars have “destroyed our reputation as a reliable supplier and have left family farmers with swelling grain stores and empty pockets.”

Opportunities slipping away

International Dairy Foods Association president Michael Dykes said producers want normal trade returned because China’s commercial demand is expected to continue to increase.

“We must regain market share from our competitors who’ve benefited from these trade disputes. Over the next decade, China represents a $23 billion market opportunity for U.S. dairy.”

David Herring, president of the National Pork Producers Council, said “patriotic farmers”  have borne the brunt of China’s trade retaliation. A “historic sales opportunity” could slip away if a resolution does not come quickly. China is facing a pork shortage as a virus decimates the national swine herd.

In Arizona, the new tariffs will hurt farmers here who produce dairy, small grains, tree nuts, dates, pork, beef and cotton, said Stefanie Smallhouse, president of the Arizona Farm Bureau.

“We need these issues to be resolved faster than we’re going out of business, and right now those two things are catching up with each other.”

Casualties piling up across industries  

Since July 6, Trump has increased tariffs four times on Chinese goods. Xi has retaliated each time with trade duties on American goods.

The latest round came early this month after negotiations failed – again. Trump then jacked up tariffs from 10 to 25 percent on a portion of $200 billion of Chinese imports. Xi retaliated, hiking taxes on $60 billion of U.S. goods as high as 25 percent. The next round will be tariffs on virtually all Chinese goods coming to the United States. Beijing indicated it will retaliate.

If the two leaders follow through, agriculture, technology, manufacturing and automotive sectors will be among the hardest hit. Consumers will be impacted more this time around, said a new study by Citi that evaluated U.S. Trade Representatives office’s list of $300 billion worth of Chinese goods, Yahoo Finance reported Wednesday.

Last year’s tallies

While Trump has hailed the tariffs as beneficial to the U.S., data from the Department of Agriculture, Department of Commerce and industry shows last year was difficult for a wide range of industries:

  • U.S. farm goods to China plummeted to an estimated $9.2 billion last year compared to $19.5 billion in 2017.
  • Automobile and equipment manufacturers costs rose as high as 50 percent last year due to hefty steel tariffs  
  • New enrollment of international students fell by 6.6 percent at American universities in the 2017-2018 academic year, according to the annual Open Doors survey.
  • U.S. soybean sales to China dropped 80 percent to $2 billion last year as China has moved on to other markets like Brazil. Before the conflict, U.S. farmers shipped $10-$12 billion a year.  
  • U.S. cheese and whey exports to China dropped 44 and 32 percent respectively under hefty tariffs.

What now?

In Arizona, where almost 773,000 Arizona jobs rely on global trade, an estimated $596 million in exports from Arizona are targets of retaliation, according to an analysis by the U.S. Chamber of Commerce.

Many industries are predicting cutbacks in production and increased expenses as tariffs stick.

With agricultural sales down, farm equipment manufacturers and automakers like Deere, Ford and GM report they are cutting production and expect to see record increases in costs this year.

“This is just one more example of how Tariff Man is causing long-term damage to the U.S. economy by disturbing and distorting global supply chains and international trading relationships that took many years to develop in some cases,” Mark J. Perry, a scholar at the American Enterprise Institute, wrote in reaction to Trump’s failed deal.

Americans and industry benefit from trade, not tariffs  

Industry advocates say there are better ways to negotiate with China including joining with allies to issue sanctions for unfair and unethical practices.

It’s time to move back to free markets, Myron Brilliant, Executive Vice President and Head of International Affairs for the U. S. Chamber, which represents more than 3 million businesses, said in a statement.

“Prolonging trade tensions and the escalation of tariffs are in neither country’s interest,” Brilliant said. “Millions of U.S. jobs depend on America’s ability to trade with other countries. Half of all U.S. manufacturing jobs depend on exports, and one in three acres of American farmland is planted for international sales. But recent and proposed trade actions by the Trump administration threaten as many as 2.6 million American jobs and will stymie our economic progress.”

Farm aid breakdown

President Trump’s latest farm aid package includes:

  • $14.5 billion distributed directly to farmers  
  • Producers of more than two dozen products will be eligible for payments including barley, corn, rice, peanuts, tree nuts, dairy and pork
  • The first payments will be made in late July and early August, with two more in  November and January if no trade agreement is reached by then
  • $1.4 billion to purchase surplus commodities for schools and food banks
  • $100 million to develop new export markets   

Victoria Harker

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