Tag Archives: Trade

DES MOINES, Iowa (AP) — Farmers and agricultural economists are worried that president Donald Trump’s trade, immigration and biofuels policies will cost farms billions of dollars in lost income and force some out of business.

Even before Trump began talking tariffs earlier this year farm income was expected to drop 7 percent from last year to just under $60 billion. That’s half of farm income reported just five years ago.

In addition to falling corn, soybean and pork prices caused by the tariff dispute, the administration’s ethanol policy has reduced the use of corn by hundreds of millions of bushels, helping to push prices below profitability and immigration actions risk hampering expansion plans in pork industry.

Some are saying the resulting blow to agriculture could create the worst farm financial crisis since the 1980s.

BEIJING (AP) — The United States hiked tariffs on Chinese imports Friday and Beijing announced it was retaliating against American goods in a technology dispute between the world’s two biggest economies that President Donald Trump says he is prepared to escalate.

Washington imposed 25 percent tariffs on $34 billion worth of Chinese imports, a first step in what could become an accelerating series of tariffs.

Retaliatory measures “took effect immediately,” said a Chinese foreign ministry spokesman, Lu Kang. Hu gave no details, but the Communist Party newspaper People’s Daily said the customs agency was carrying out a plan announced last month to impose 25 percent tariffs on a $34 billion list of American goods including soybeans, pork and electric cars.

Companies worry the spiraling dispute could chill global economic growth, but Asian financial markets took Friday’s developments in stride.

Japan’s main stock index, the Nikkei 225, gained 1.1 percent while the Shanghai Composite Index added 0.5 percent. Hong Kong’s Hang Seng rose 0.8 percent.

On Thursday, Trump said higher tariffs on an additional $16 billion in Chinese goods were set to take effect in two weeks. He spoke to reporters who flew with him to Montana for a campaign rally.

After that, the hostilities could intensify: Trump said the U.S. is ready to target an additional $200 billion in Chinese imports — and then $300 billion more — if Beijing does not yield to U.S. demands and continues to retaliate.

That would bring the total of targeted Chinese goods to potentially $550 billion — more than the $506 billion in goods that China shipped to the United States last year.

The Trump administration contends China has deployed predatory tactics in a push to overtake U.S. technological dominance. These tactics include cyber-theft and requiring American companies to hand over technology in exchange for access to China’s market.

Chinese officials reject accusations of theft and say no foreign company is obligated to share technology. But rules on auto manufacturing and other industries require companies to work through state-owned partners, which forces them to share know-how with potential competitors.

The Commerce Ministry said Trump “ignited the biggest trade war in economic history.”

“The United States has blatantly violated WTO rules,” said Hu, the foreign ministry spokesman. “Any unilateral pressure will be futile.”

Washington has strained relations with potential allies in its dispute with Beijing by raising import duties on steel, aluminum and autos from Europe, Canada, Mexico and Japan.

Trump’s confrontational outlook applies to other trading partners as well as China, said Tai Hui, chief strategist for JP Morgan Asset Management, in a report.

“This is a potential concern for the outlook of corporate investment and consumption around world,” said Hui.

The official China Daily newspaper accused the Trump administration of “behaving like a gang of hoodlums.” It said they would damage the global economy unless other countries stop them.

“There should be no doubting Beijing’s resolve,” the newspaper said.

The American Chamber of Commerce in China appealed to both sides to negotiate a settlement.

“There are no winners in a trade war,” said the chamber’s chairman, William Zarit, in a statement. It said American companies want fairer treatment but will be hurt by U.S.-Chinese tensions.

“We urge the two governments to come back to the negotiation table,” said Zarit.

Lawmakers may have left steamy Washington, D.C., for cooler temperatures, but Politico says they’ve only just begun to heat up talks to kill President Donald Trump’s rapidly spreading tariff war.

In talking about Trump’s tariffs, Senator Orrin Hatch of Utah says, “I want to kill them.” The Finance Committee chaired by Hatch is working on legislation to rein the president in. Republican Senators Bob Corker of Tennessee and Pat Toomey of Pennsylvania are still working on what some have called a “hand grenade” amendment to stop Trump’s trade offensive. Politico says Republican sources tell them not a party meeting goes by where Republicans don’t fume over why the president isn’t listening to them on trade.

Senate Ag Committee chair Pat Roberts says his committee has met with the president on trade, but says, “Trump is a protectionist who has his policy wrapped around the rear axle of a pickup and it’s hard to get out.” The U.S. Chamber of Commerce released a report highlighting how much every state is affected by retaliatory tariffs. “The administration is threatening to undermine the economic progress it worked so hard to achieve,” says Chamber President and CEO Tom Donohue.

LINCOLN – Governor Pete Ricketts is encouraging Nebraska farmers, ranchers, and agribusiness representatives to take part in the state’s upcoming trade mission to Mexico this August.  On the mission, Nebraska representatives will have opportunities to meet with Mexican agriculture officials and industry representatives.

“Trade is an essential part of growing Nebraska and continues to be a top priority for my administration and me,” said Governor Ricketts.  “Mexico is Nebraska’s second-largest ag export market and a major market for Nebraska beef, so we want to thank the people of Mexico for their past business and grow more opportunities for Nebraska’s farm and ranch families.”

Nebraska Department of Agriculture Director Steve Wellman, who will accompany Governor Ricketts on the trade mission, stressed the importance of growing agricultural trade opportunities in Mexico.

In 2016, total agricultural exports from Nebraska to Mexico equaled an estimated $956 million out of a total agriculture export value of $6.4 billion.  Mexico is Nebraska’s largest export market for corn, wheat, dairy, sugar and sweeteners, and animal fats, and the state’s second-largest export market for soybeans and soybean products, dry edible beans, sorghum, distillers grains, feeds and fodders, and planting seeds.

“Trade is important to all Nebraskans as we produce more ag products than we are able to consume,” said Director Wellman.  “Nebraska farmers, ranchers, and agribusiness leaders are the best people to share the story of Nebraska agriculture and the quality ag products we have to offer.”

Due to the nature of the trip and the meetings involved, the delegation group is limited in size.  Participants will be responsible for all costs associated with the trip including airfare, lodging, meals, and participation fees.  For more information about the trade mission or for those interested in attending, email Stan Garbacz, Nebraska ag trade representative, at stan.garbacz@nebraska.gov.

ARLINGTON, Virginia — In response to a U.S. Department of Commerce Section 232 investigation into automobile and auto parts imports, U.S. Wheat Associates (USW) once again expressed concern about using questionable national security arguments as a basis for import restrictions and the potential for retaliation from trading partners.

In comments on the investigation submitted June 22, 2018, USW strongly encouraged the Commerce Department to “stick to serious national security concerns when using Section 232 and avoid making this process even more ridiculous than it has become after the steel and aluminum investigations.”

Before any restrictions on automobile and auto parts imports are taken under Section 232, USW said Commerce “should consider the fallout if other countries follow suit and impose restrictions on U.S. wheat or other products as a result of their own national security concerns, whether real or imagined.”

As a representative of U.S. wheat farm families who rely on export demand to boost their income potential, USW was among the first agricultural organizations to publicly oppose the use of Section 232 to impose tariffs on steel and aluminum imports. Farmers have already been hit hard by tariffs on hundreds of food and agricultural products in retaliation for recent unilateral trade actions and much more is expected soon.

While the reactions of countries to U.S. steel and aluminum protectionism has been negative for farmers, USW said the case of automobiles is much more dangerous because the dollar figures are so much larger.

“Automotive imports in 2017 were about ten times larger than steel imports and much of this came from significant wheat importers like Mexico, Japan, South Korea and the European Union,” USW said in its comments. “The chances that U.S. wheat farmers will face retaliation increases substantially if the final measures reflect the scope of the investigation.”

USW also argues that invalid use of the national security exemption created in Section 232 of the General Agreement on Tariffs and Trade undermines effective global trading rules.

“Whatever surface level plausibility existed for justifying restriction on steel and aluminum imports is entirely absent when it comes to automobiles,” USW stated. “The breathtaking leap of logic required to recommend tariffs on imported automobiles and parts due to their threats to national security suggest that the only plausible reasons for this action are either economic protectionism in violation of our WTO commitments or a negotiating tactic. Use of this statute as a negotiating tactic is an abuse of the authority granted by Congress and economic protection is available through trade remedy laws if the need for protection meets the requirements of the relevant statutes. In either case, the Department of Commerce should find that these imports do not threaten national security.”

Agriculture Secretary Sonny Perdue says President Donald Trump will protect U.S. farmers from trade retaliations. In a USA Today editorial, Perdue says if China does not soon mend its ways, “we will quickly begin fulfilling our promise to support producers.”

Perdue says Trump knows U.S. farmers feed, fuel and clothe the world, and that he will “not allow U.S. agriculture to bear the brunt” of China’s retaliations. China is retaliating against the Trump trade war by targeting U.S. agricultural products, such as soybeans, and many others.

The Department of Agriculture has yet to release its plan to support farmers through a trade war. Perdue says it’s a simple case of ‘not releasing your plan when the opposing team is watching.’ However, agriculture is eager to see what’s in store as trade tensions rise. Meanwhile, Perdue says, if Trump is successful, “farmers will reap the benefits.”

An unstable market is a reminder of how important a global market development strategy is to long-term demand growth and weathering short-term trade disputes.

Despite dizzying headlines and potential trade disruptions caused by the threats of tariffs and retaliations between the United States and its trading partners, the U.S. Grains Council (USGC) remains unwavering in its commitment to enabling trade across the globe.

This week, the United States made good on planned new tariffs on Chinese goods, which should go into effect in the coming weeks; China issued new lists of products that would be retaliated against when that happens, including most major agricultural goods; and the United States proposed an additional 10 percent tariff on even more Chinese goods, worth about $200 billion.

Unfortunately, these challenges are not new for the Council or its members, who produce, sell and export U.S. corn, sorghum, barley, distiller’s dried grains with solubles (DDGS) and ethanol.

“The farmers and exporters we represent have been here before regarding China and they are well aware of what it’s like to deal with tariffs, counter-tariffs and policy restrictions,” said Tom Sleight, USGC president and chief executive officer in a statement. “Since 2010, we have been adversely impacted by trade policy actions by China against our products.

“China is a very important market for U.S. coarse grains and their co-products, but so too is the rest of the world. We will stay closely engaged with China, but we will also redouble our efforts in the rest of the world to expand demand.”

Partnering with members and utilizing funds from U.S. Department of Agriculture’s Foreign Agricultural Service’s (USDA’s FAS) Market Access Program (MAP) and Foreign Market Development (FMD) programs, which are authorized in the farm bill, the Council has worked to build global markets for U.S. coarse grains and co-products for almost 60 years.

With this experience comes the knowledge that when one market is disrupted, others can – and often do – absorb that tonnage. While these shifts often come with costly price and logistics disruptions, the diversification of markets is also a long-term gain for U.S. farmers and agribusinesses.

In both the short and long term, there is significant potential for demand growth in new and existing markets.

In less than a decade, Vietnam has jumped from the 16th to the third largest corn importer, facilitated by population and economic growth in combination with market development work by the Council. After it purchased four vessels of sorghum when China imposed 178.6 percent tariffs on the commodity, Saudi Arabia could represent another possible market to which to redirect grain sales. And Japan, South Korea and Taiwan all represent mature markets on which U.S. exporters have been able to rely to buoy shifting markets in times of trade turmoil.

All told, 75 countries buy U.S. coarse grains and co-products each year and will likely continue to do so as demand for protein and biofuels grows. The United States remains the most robust agricultural producer in the world and the Council will work to ensure the commodities U.S. farmers and agribusinesses produce reach those global markets.

“If the U.S. encounters trade issues in one market, we will turn our attention to redirecting trade flows,” Sleight said. “We are busy everywhere in the world creating demand for our products, so we trust the leaders at the USDA, the Office of the U.S. Trade Representative (USTR) and the White House know how critical open markets are to our industry and appreciate their support during this process and in this tense

Flour milling executives from Sub-Saharan Africa are in the U.S. plains states to get the latest information about the hard red winter (HRW) wheat harvest, crop quality and value.

 

U.S. Wheat Associates (USW), the U.S. wheat industry’s export market development organization, anticipates new opportunities to export more U.S. hard red winter wheat to these countries. To ensure key wheat buyers in the region get the latest information they need about HRW quality and value, USW brought a team of flour milling executives from Nigeria, South Africa, Tanzania and Liberia to Texas, Oklahoma and Kansas June 11-21, 2018.

 

While in Kansas, the flour millers toured the Grain Craft Wheat Quality Lab in Wichita, the Kansas Wheat Innovation Center and IGP Institute in Manhattan and Cargill Elevator and wheat harvest near Salina.

 

Aaron Harries, Vice President of Research and Operations at Kansas Wheat, traveled with the group.

 

“Nigerian flour millers continue to be extremely good customers for Kansas wheat farmers,” he said. “About half of the Kansas wheat crop is exported every year, and Nigeria has been a top buyer in recent years. They love the consistent quality they get in wheat from the U.S. We want to be able to grow our market share in the Sub-Saharan region and build the same relationship of trust with our buyers in South Africa.”

 

Nigeria has been a solid market for U.S. HRW wheat for the past couple decades. U.S. wheat farmers, through the trade servicing and technical support of U.S. Wheat Associates (USW), funded with strong support from USDA’s Foreign Agricultural Service, helped establish flour milling as a highly successful industry in the west African nation. Hard red winter (HRW) became the standard source of flour for pan bread and instant noodles in Nigeria. Unfortunately, the U.S. has lost marketing share in the recent years, mainly due to cheaper wheat from other origins, including Russia, Europe, Argentina and Australia.

 

U.S. HRW wheat remains the dominant source of flour to make instant noodles and wet pasta in Nigeria and a key ingredient as a blending wheat for pan bread flour. USW continues to keep buyers informed about U.S. wheat quality and a long-term effort to provide regular trade service, including this annual trade team visit, as well as training and technical assistance to the major Nigerian flour milling companies.

 

South Africa is a smaller market than Nigeria, but annual per capita wheat consumption is the highest in the Sub-Saharan region. Though it varies widely year to year, South Africa produces about half of its annual wheat consumption. Wheat breeders and flour millers are working together to develop improved protein varieties of wheat for South African farmers so it can be blended with imported wheat. Millers prefer imports of HRW and similar classes of German and Argentinian wheat and tend to buy more of whatever is the least expensive.

 

U.S. HRW was much more competitive the past two marketing years. In fact, South African millers imported HRW for the first time in five years in 2016/17. USW kept up the momentum by bringing representatives from a prominent milling company to the United States to observe production and be even better prepared to take advantage of favorable prices this marketing year. Although their pace of imports is down, South African millers have kept HRW in their blends again this year.

 

Before their time in Kansas, the team visited the Port of Corpus Christi, Tulsa Port of Catoosa, export elevators in Texas and a wheat farm in Oklahoma.

 

Funding for the visit came from USDA’s Foreign Market Development export programs with support from Texas, Oklahoma and Kansas Wheat Commissions.

ARLINGTON, Virginia — The familiar African proverb says that when elephants fight, it is the grass that suffers. Unfortunately for America’s farmers, that grass is the wheat growing in their fields as the big guys in Washington, D.C., and Beijing escalate their trade fight.

China’s state-run importing agency and private flour millers bought an average of more than 1.1 million metric tons of U.S. wheat the past five years because our farmers produce higher quality grain than China can grow on its own. Following the Trump Administration’s announcement of new tariffs on $50 billion of imported Chinese goods, China hit back with tariffs of its own, including a 25 percent tariff on U.S. wheat imports. In response, the White House is ordering trade officials to draw up a list of $200 billion worth of Chinese goods that would be hit with a 10 percent tariff on top of the 25 percent tariffs already promised. In a trade war, agriculture always gets hit first and the effects of these tariffs could prove devastating for farmers.

No one in China will be hurt if the retaliatory U.S. wheat tariff is implemented. China has huge amounts of stored wheat and they can purchase what they need from Australia, Canada or even Kazakhstan, although Chinese consumers will miss the opportunity to experience higher quality products made from U.S. wheat. Instead, the outcome is likely to further erode the incomes of farm families who strongly support addressing the real concerns about China’s trade policies.

According to the USDA, net cash wheat farm income is projected to be down more than 21 percent this year compared to last. U.S. wheat growers are not in the business of ceding a market like China that wants to buy their crop and could buy so much more of it. That is why in 2016, U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) called for World Trade Organization (WTO) cases intended to push China to meet its WTO commitments on domestic support and tariff rate quota management. We are happy that the Trump Administration supports and is pursuing those cases.

USW and NAWG know that farmers still want our organizations to keep fighting for fair opportunities to compete in China and other countries. They would prefer, however, to see our government do that first within the processes already in place.

Instead, the Administration is doubling down on a tactical policy that makes an already risky business of agriculture even more volatile.  Policies like the ones being proposed will only make times harder for farmers, and the Administration’s vague promises of protection for the farmers we represent offers little consolation.

Our country’s continuing agricultural trade surplus is proof that America’s farmers can compete successfully in the world based on the quality and value of what they produce, given the freedom to do so.

The trade war between the U.S. and China is proving to be costly to U.S. farmers, just as President Trump announced the intent for further tariffs, escalating the tense state of affairs.

University of Illinois agriculture economist Scott Irwin this week on Twitter says the outlook has “moved into disaster territory,” specifically, regarding soybeans. And, Jim Bower of Bower Trading in his daily newsletter wrote: “At this point, it is hard to imagine the trade news getting much worse.”

New crop soybean futures have dropped roughly 20 percent since May 29th, and corn futures are down 16 percent since late May. For soybeans, the decline is near a dollar and a half per bushel, representing a loss of more than $6 billion on the 2018 soybean crop.

The American Soybean Association Tuesday linked the drop to the trade war, as President John Heisdorffer stated: “Soybean prices are declining as a direct result of this trade feud.” The statement says ASA is disappointed and highly concerned that trade tensions continue to ratchet up rather than de-escalate between the two countries.