US-China trade dispute intensifies: Fear among farmers deepens as tit-for-tat tariffs escalate

14 May 2019 --- As the US and China remain entangled in a bitter trade dispute, a multitude of US agricultural associations are growing increasingly concerned over the most recent escalation of the conflict. President Trump recently increased the tariff rate from 10 to 25 percent on US$200 billion worth of Chinese goods, sparking more fears from farmers as the likelihood of a trade truce seems very far away. Further cementing that fear, in a retaliatory move, China has also threatened to impose tariffs on US$60 billion of US goods from June 1.

Yesterday China said it will increase tariffs on around 5,000 US products, with the new rates ranging from 5 percent to 25 percent – in a few weeks time. Products affected include beef, lamb and pork products, as well as various varieties of vegetables, fruit juice, cooking oil, tea and coffee.

China’s Ministry of Commerce (MoC) had warned this was to be expected, shortly after the US doubled its tariffs on Chinese goods late last week. “The escalation of trade friction is not in the interests of the people of the two countries and of the world. China feels deeply sorry for that. If the US tariff measures are implemented, China will have to take necessary countermeasures,” an MoC statement reads. 

The two countries have been struggling to sign a trade deal and end a trade conflict that seems to be getting worse rather than better.

As the US farm belt gets caught up in the so-called trade war and certain crops become collateral damage, farmers across the country are “extremely concerned” by the actions taken by the US Administration.

The National Association of Wheat Growers, the American Soybean Association and the National Corn Growers Association were expecting a deal to end the trade dispute by March 1, before farmers went back into the fields.

The three commodities (corn, soybeans, wheat) represent around 171 million acres of farmland in the US. 

“US wheat growers are facing tough times right now and these additional tariffs will continue to put a strain on our export markets and threaten many decades worth of market development,” says Ben Scholz, President of the National Association of Wheat Growers (NAWG). 

The food industry, in general, has been closely following the trade conflict for months. It has been particularly damaging for the US dairy and soybean sectors. In 2018 those impacts on dairy farmers due to lower exports to China were expected to tally US$1.1 billion and to total US$2.2 billion in 2019 unless the trade conflict is resolved.

The US Dairy Export Council (USDEC) is closely monitoring trade developments between the US and China in the wake of the new series of tariffs on both sides. 

The trade tensions have also rocked the foundation of a decades-old trade relationship US soybean farmers built with China, the largest market for American beans, according to the American Soybean Association (ASA). As a result, sales have been halted, crop prices have plummeted and there has been a lack of security for farmers seeking funding for the 2019 season.

“We have heard and believed the President when he says he supports farmers, but we’d like the President to hear us and believe what we are saying about the real-life consequences to our farms and families as this trade war drags on,” adds ASA President Davie Stephens. 

“It took us more than 40 years to develop the China soy market. For most of us in farming, that is two-thirds of our lives. If we don’t get this trade deal sorted out and the tariffs rescinded soon, those of us who worked to build this market likely will not see it recover in our lifetime,” he notes.

Growers have been reeling for almost a year now after President Trump first imposed a 25 percent duty on US$50 billion worth of Chinese goods in July 2018, and later, a 10 percent duty on an additional US$200 billion worth of Chinese products, which resulted in the retaliatory tariffs on US goods. These continue to have a compounding impact not only on agriculture but all industries across the US.

“Corn farmers are watching commodity prices decline amid ongoing tariff threats, even while many can’t get to spring planting because of wet weather. Holding China accountable for objectionable behavior is an admirable goal, but the ripple effects are causing harm to farmers and rural communities,” says National Corn Growers Association (NCGA) President Lynn Chrisp.

“Farmers have been patient and willing to let negotiations play out, but with each passing day, patience is wearing thin. Agriculture needs certainty, not more tariffs,” he says.

According to the US, China’s trade surplus is down to unfair practices including state support for domestic companies and the US Government also accuses China of stealing intellectual property from US companies. 

Conclusion
It is unclear what exactly will happen next, but President Trump has signaled that he is content leaving the duties in place, insisting that the trade dispute will damage China more than the US. However, the farming organizations, many of which were big supporters in Trump’s 2016 Presidential campaign, disagree and fear that worse is yet to come. The US-China trade dispute is also being closely watched in the EU.

Meanwhile, President Trump and Xi Jinping could meet at the forthcoming 2019 G20 summit which will be held on June 28–29 in Osaka, Japan. 

By Gaynor Selby