WASHINGTON – U.S. Senator Jerry Moran (R-Kan.) spoke on the Senate floor regarding the importance of trade to Kansas and his concerns with tariffs and escalating a trade war. In addition, U.S. Trade Representative Robert Lighthizer this morning testified before Sen. Moran’s Senate Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies. To watch Chairman Moran’s opening statement, click here.
Click Here to Watch the Full Remarks
“The significant harm the trade war is causing to farmers and ranchers is no doubt the reason the administration is proposing $12 billion in disaster relief for agriculture,” said Sen. Moran.“Unfortunately, it is only a short-term fix to a long-term problem and will not make up for lost markets for farmers.”
China and Mexico – two of the largest markets for Kansas producers – have already started to increase purchases of ag commodities from Brazil and Argentina, instead of from U.S. producers,” Sen. Moran continued. “I’m concerned that once we lose those markets, it will take years, if ever, for us to get those markets back. This hit could not come at a worse time for ag producers – farm revenue has already fallen by over 50 percent since 2013. Low commodity prices have pushed many producers to limits of financial viability.”
Sen. Moran’s full remarks as prepared for delivery:
“I rise today to speak about the importance of trade to Kansas and about my concerns with tariffs and escalating a trade war. A global trade war will raise the price of goods for American consumers; result in retaliation against farmers, ranchers and manufacturers who depend on exports; and weaken our ability to work with our allies to challenge China’s unfair trade practices.
“Kansans are already feeling the effect of the tariffs. Approximately $361 million worth of Kansas exports are being targeted in the emerging trade war, including soybean and sorghum exports to China, aerospace exports to Canada, and beef and corn exports to Mexico. Moving forward with another $200 billion or $500 billion in tariffs against China, or new section 232 tariffs on automobiles for supposed national security concerns, will only increase the negative impact on Kansas. With 95 percent of consumers living outside our country’s borders, the ability for Kansas farmers and ranchers to earn a living is directly tied to our ability to sell the food, fuel and fiber we grow to people around the globe.
“Since March, uncertainty in trade has contributed to the price of soybeans falling by $2 per bushel. A $2 drop in soybean prices equates to Kansas farmers and grain handlers losing out on about $378 million of possible revenue solely on soybeans. The significant harm the trade war is causing to farmers and ranchers is no doubt the reason the administration is proposing $12 billion in disaster relief for agriculture. Unfortunately, it is only a short-term fix to a long-term problem and will not make up for lost markets for farmers.
“China and Mexico – two of the largest markets for Kansas producers – have already started to increase purchases of ag commodities from Brazil and Argentina, instead of from U.S. producers. I’m concerned that once we lose those markets, it will take years, if ever, for us to get those markets back. This hit could not come at a worse time for ag producers – farm revenue has already fallen by over 50 percent since 2013. Low commodity prices have pushed many producers to limits of financial viability. I wrote an op-ed this spring arguing that Kansas farmers and ranchers can’t afford a trade war. Now, with fall harvest around the corner, many farmers will be faced with the reality of selling grain at or below the cost of production, just to be able to pay off this year’s operating loans.
“The impact of the downturn in the ag economy cannot solely be quantified on a balance sheet. I’m concerned that reduced economic opportunity in agriculture will result in fewer young people returning to rural America. Because when agriculture struggles, so do our rural communities. As the average age of a farmer nears 60 years old, it is critical that our policies increase the likelihood that a young person is able to return home to take over a family farm or ranch.
“I fear the trade war and tariffs will unfortunately have the opposite effect – fewer markets to sell meat and grain will make it more difficult for the next generation to earn a living in rural America. Kansas manufacturers are also dealing with the negative impacts of recently imposed tariffs. Users of steel and aluminum are facing increased cost for materials, regardless of whether they utilize domestic or imported steel and aluminum.
“Chanute Manufacturing in Chanute, Kansas is a perfect example of the steel and aluminum tariffs harming small companies and workers. The company, which employs about 130 Kansans, is a domestic manufacturer of steel-based components for the power generation market. Due to the tariffs, Chanute’s cost for raw material has increased by about eight percent. However, when the same power plant equipment is manufactured overseas, it can be imported tariff-free. So, the actual, unintended consequence of the steel tariff has been to incentivize foreign manufacturing of power equipment currently made in Kansas. Chanute Manufacturing has also missed opportunities to compete for projects in other countries due to these tariffs. Last year, the company built and shipped equipment it manufactured in Kansas to Morocco. However, when a duplicate project came available in Morocco again this year, Chanute wasn’t even considered because the steel tariffs have raised their production costs, making them less competitive than cheaper, foreign manufacturers.
“Tariffs are not the only tool to make certain other countries follow international trade rules and treat American exporters and workers fairly. I support efforts to hold China accountable for unfair trade practices, and the theft of trade secrets and intellectual property rights from American companies. I applauded the U.S. for filing a challenge to China’s domestic agricultural support levels at the World Trade Organization. When China unfairly subsidizes its producers or limits market access of U.S. wheat, corn and rice, the U.S. is right to contest them.
“While I remain unconvinced that tariffs are the best tool to change China’s behavior, it does not mean we should not pursue strong enforcement of global trade rules. I’m also concerned that picking a fight on trade with the rest of the world reduces our ability to win the fight with China – the country most deserving of strong trade actions from the United States. By attempting to take the whole world on at once, the U.S. risks spreading our resources thin; thus, reducing our focus on changing China’s trade practices. The U.S. is not the only country with complaints about China’s trade practices. Yet, instead of working with allies to influence China and change their behavior, we’ve forced confrontations with other countries who ought to be by our side in dealing with China. I believe that by strengthening our trade and economic relations with our allies, the U.S. will be better able to continue directing sound trade policy on the global stage. This includes successfully concluding NAFTA renegotiations with Canada and Mexico and re-engaging in TPP negotiations or pursuing bilateral agreements with countries in TPP, such as Japan.
“This week, Ambassador Lighthizer will be testifying before the Appropriations subcommittee I chair, the Commerce, Justice and Science Appropriations Subcommittee, which oversees funding for the Office of the U.S. Trade Representative. The hearing will be an opportunity for the subcommittee to hear firsthand from Ambassador Lighthizer on USTR’s trade efforts and to express concern about the impact the tariffs have had – and will continue to have – on our constituents. I hope to learn more about the administration’s strategy and end goal in threatening more tariffs, progress to conclude NAFTA negotiations and efforts to fulfill the president’s call for new bilateral trade agreements.
“Again, recently-imposed tariffs are having immediate effects on farmers, ranchers and manufacturers, but the long-term implications of disrupting supply chains and losing market shares that took decades to build up is perhaps even more concerning. It is time to inject more certainty into our trade policies. We ought to start by reaching an agreement on a modernized NAFTA and ending the threat of escalating a trade war. I look forward to the conversation with Ambassador Lighthizer this week and making certain the administration understands the importance of getting trade policy right for Kansas.”