Tariff turmoil China levies will hurt farmers

The current back-and-forth tariff environment has put agricultural products, and Arkansas farmers and ranchers, in the crosshairs of a trade war with one of the top markets for U.S. farm products, China.

Having visited China twice in an effort to expand trade of agricultural products from Arkansas, I can attest to the challenges to doing business with the world’s most-populated country. Their socialist principles and limited scientific and technology advancements in the agriculture sector have held back the country’s ability to feed its people and created an obvious need for food imports.

U.S. tariffs on Chinese aluminum and steel led to China imposing additional tariffs on U.S. agriculture products, especially pork, which has led to a halt in U.S. pork exports valued at more than $1 billion per year. The difficulties in dealing with China are likely to be further complicated when the Trump administration announces the final list of some $50 billion in Chinese goods that it intends to hit with a 25 percent tariff by June 15. Without these added tariffs, agriculture commodities would likely continue to grow.

The proposed U.S. tariffs on Chinese imports are a result of an investigation into violation of U.S. technology and intellectual property laws. U.S. implementation of these tariffs would prompt China to retaliate on $50 billion worth of U.S. goods, which would impact an estimated $16.5 billion in U.S. exports, including soybeans, corn, wheat, cotton, beef, and other agricultural products.

These tariffs would increase U.S. soybean tariffs from 3 percent to 28 percent, U.S. cotton tariffs from 1 percent to 26 percent, and U.S. beef tariffs from 12 percent to 37 percent, severely eroding the U.S. competitiveness in China, which will negatively impact prices received by Arkansas farmers.

It is important to put this in context: Arkansas agriculture supports one in every six jobs in our state, and is Arkansas’ largest industry, offering more than $20 billion annually to the economy. That is larger than the retail sector, more significant than trucking, tourism, aerospace, et al. Anything that negatively affects agriculture has an impact on Arkansas and the economic viability of our farmers and ranchers. That is why we pay so much attention to international issues, almost as much attention as we give the weather forecast.

China is the primary export market for U.S. soybeans, with roughly one-third of our soybean production sold to China. Using a farmer’s common sense, that means one in every three rows of soybeans grown in the U.S. has ended up in China. Soybeans are Arkansas’ largest row crop, accounting for over half of the acreage planted in the Delta.

A recent study by Purdue University—using Chinese tariffs of 10 percent to 30 percent on U.S. soybeans— estimated that the annual loss in U.S. economic well-being would range between $1.7 billion and $3.3 billion. And that is from soybeans alone.

Solving a few issues on various commodities would allow the ag-trade relationship between China and the U.S. to grow in a beneficial manner, and we encourage the U.S. trade negotiators to focus their time and energy on this.

Arkansas farmers were excited when earlier negotiations by the Trump administration led to the opening of China to U.S. beef and rice exports, both of which are very important to Arkansas’ economy. The proposed tariffs will levy an additional 25 percent tariff on U.S. beef. And while the escalating trade dispute has not led to increases in rice tariffs, it is likely to slow the process the rice industry has undertaken to get necessary import certificates in China.

Just so we don’t forget, Arkansas grows more than half of the rice in the United States.

The growing Chinese middle class offers vast opportunities for U.S. farmers who want to supply Chinese consumers with high-quality protein sources (many raised right here in Arkansas) either grown in the U.S. or fed with U.S. grain and soybeans.

In short, what happens with Chinese trade will be felt on Arkansas’ economy. We count on foreign trade, and want fair trade from all of our partners, including China.

Let’s pray that this latest tariff issue doesn’t result in a debilitating body blow to the men and women of Arkansas agriculture. That sort of impact to agriculture would have repercussions that would be felt all across the Natural State.

Randy Veach of Manila (Mississippi County) is president of Arkansas Farm Bureau, the state’s largest agricultural advocacy organization. He is a third-generation farmer whose farmland was cleared by his father and grandfather.