Commerce Department Recommends High Tariffs on Chinese Steel, Aluminum-Ag Groups Fear Retaliation02/20/2018
The U.S. Commerce Department on Friday recommended stiff new tariffs or quotas on Chinese steel and aluminum imports, sparking new fears of a trade war that could end up hurting U.S. agricultural exports.
Commerce Secretary Wilbur Ross said excessive Chinese exports of steel and aluminum to the U.S. “threaten to impair the national security” of the United States, justifying tariffs as high as 53 percent on steel and 23.6 percent on aluminum from China and elsewhere. The U.S. needs to take action to protect domestic steel and aluminum producers that supply the U.S. military, he stressed.
But if President Donald Trump approves any of the measures – he doesn’t have to – farm groups fear it will be the start of a trade war and sharp retaliation from China, the largest foreign market for U.S. agricultural exports.
“Everyone agrees we need to hold our trading partners accountable, but taking unilateral action to raise tariffs often comes with harmful unintended consequences,” said Brian Kuehl, executive director of the group Farmers for Free Trade. “History shows those consequences are most often paid by American farmers. If the President follows through on these tariffs it could escalate trade tensions rather than resolve them, putting U.S. agricultural exports in the cross-hairs. The agriculture sector knows from experience that our ag exports are the first to be hit by retaliation.”
Many believe the first shots of the trade war already started when China announced earlier this month it was beginning dumping and countervailing investigations into U.S. sorghum exports – a response to the January announcement by the U.S. of new duties on Chinese washing machines and solar cells.
But there are much bigger targets for China that U.S. sorghum. The U.S. exports about $12 billion worth of soybeans to China and any interruption to that trade would be devastating to the U.S. ag sector.
USDA Secretary Sonny Perdue, speaking at a recent House Agriculture Committee hearing, said he hoped for caution when it comes to confronting China.
“It just shows you … how fragile and sensitive the ag economy and commodity prices are now to trade disruptions and we need to be careful as we take actions there,” he said. “Agriculture is usually the tip of the spear of retaliatory measures.”