Back and Forth on China Trade War Having Dizzying Effect on Ag Industry05/31/2018
Tuesday was back-to-work time for farmers who took Memorial Day off – and the White House returned to a position of antagonism in its trade dispute with China. Little more than a week after Treasury Secretary Steven Mnuchin said the trade brinksmanship was “on hold” while the two countries engaged in an economic dialogue, the White House issued a surprise statement saying it will move ahead with plans to protect U.S. intellectual property.
The Trump administration said it will take steps to impose 25-percent tariffs on $50 billion worth of Chinese goods and establish broad investment restrictions along with pursuing litigation at the WTO. The list of goods it will target will be unveiled by June 15, and the added levy will be imposed shortly after, the White House said.
Earlier this year, China published a list of U.S. goods it would retaliate against in kind should Trump carry out such restrictions. Soybeans, wheat, corn, beef and orange juice were on Beijing’s hit list.
For agricultural producers, the back-and-forth headlines have had a dizzying effect. “It’s so hard to tell what’s rhetoric and what’s real, though it would surprise me if we went forward with these tariffs,” Michelle Erickson-Jones, president of the Montana Grain Growers Association, told POLITICO.
The uncertainty created by the U.S.-China trade feud – as well as the NAFTA renegotiation – is bad for commodity markets, and jeopardizes relations with buyers of American farm goods, Erickson-Jones added. Countries are looking for other suppliers. Mexico, for example, recently purchased wheat from Argentina for the first time in modern history, she said.
And despite President Donald Trump’s tendency to walk back trade threats against China, they still have to be taken seriously because the country is such an important market, said Kevin Paap, president of the Minnesota Farm Bureau: “It’s an emotional roller coaster. For soybean growers, China is our safety net.”