Will Trump heed the call of US farm­ers to re­duce trade deficits?

China Daily - - VIEWS - Zhao Huanxin The au­thor is deputy edi­tor-in-chief of China Daily USA. huanx­inzhao@chi­nadai­lyusa.com

The US farm­ing sec­tor is caught in the cross­fire of an emerg­ing trade war be­tween the world’s top two economies. As US Pres­i­dent Don­ald Trump con­sid­ers in­creas­ing farm sub­si­dies to com­pen­sate farm­ers for the ex­pected de­cline in their ex­ports and in­comes once the US im­poses the pro­posed tar­iffs on Chi­nese im­ports, rep­re­sen­ta­tives of the prime agri­cul­tural states and lob­by­ing groups de­clared they pre­fer “trade to aid”.

On April 5, Trump pro­posed puni­tive tar­iffs on $100 bil­lion worth of Chi­nese im­ports, in ad­di­tion to the pro­posed tar­iff on $50 bil­lion of Chi­nese goods two days ear­lier. In re­sponse, China an­nounced 25 per­cent tar­iffs on im­ports of US air­planes, au­to­mo­biles, and soy­bean, sorghum and other agri­cul­tural prod­ucts.

Even be­fore China’s an­nounce­ment, US farm in­come had been “trend­ing down­ward over an eight-year pe­riod”, as Trump put it last Mon­day. And US Se­na­tor Pat Roberts told PBS NewsHour on Thurs­day: “Mother Na­ture hasn’t been very good to us ei­ther.”

Over­all, US net farm in­come is ex­pected to drop by 6.7 per­cent to $59.5 bil­lion this year, the low­est since 2006, ac­cord­ing to a US Depart­ment of Agri­cul­ture re­lease.

Roberts, who is also chair­man of the Sen­ate Com­mit­tee on Agri­cul­ture, Nu­tri­tion and Forestry, was among a group of mostly Mid­west law­mak­ers who met with Trump on the trade is­sue on Thurs­day. “There was a pro­posal that was at least floated … bil­lions of dol­lars in aid to off­set any tar­iff re­tal­i­a­tion,” the Repub­li­can from Kansas told PBS af­ter the meet­ing. “Ev­ery­body there in­sisted and re­ally made their point to the pres­i­dent that we wanted trade, not aid.”

An­other Repub­li­can se­na­tor, Ben Sasse of Ne­braska, had is­sued a state­ment a day ear­lier on what he said were “mis­guided plans to spend bil­lions of dol­lars on new sub­sidy pro­grams dur­ing a poorly con­ceived, tar­iffs-first trade war”.

“This ad­min­is­tra­tion pro­posal is Satur­day­morn­ing-car­toon cen­tral plan­ning. We want more trade, not less,” Sasse said, adding that the farm­ers want to feed the world and win with trade.

And Iowa Gover­nor Kim Reynolds was quoted by ax­ios.com as say­ing farm­ers don’t want wel­fare; they want to “work and win”.

More­over, a coali­tion of 107 trade groups spoke as one on the is­sue. In a let­ter to Capi­tol Hill on Wed­nes­day, the busi­ness coali­tion, in­clud­ing the Amer­i­can Soy­bean As­so­ci­a­tion, made it clear that sub­si­dies are not a long-term so­lu­tion. “While they may pro­vide short-term re­lief — de­pend­ing on ex­ist­ing le­gal au­thor­i­ties — the long-term costs of los­ing a mar­ket will be ex­po­nen­tial,” the let­ter said.

Last year, the US shipped 32.85 mil­lion met­ric tonnes of soy­bean worth $12 bil­lion — or 62 per­cent of its to­tal soy­bean ex­ports — to China, ac­cord­ing to ear­lier me­dia re­ports.

The let­ter also said the US farm­ers and ex­porters can­not eas­ily find new buy­ers for their prod­ucts: “Once a mar­ket is lost, and a buyer shifts to a for­eign com­peti­tor, even if only for a short pe­riod of time, fu­ture US ex­ports and sales likely will be lost as well.”

Com­pared with the un­fa­vor­able weather, the pres­sure of the loom­ing tar­iffs and the un­pre­dictabil­ity of Trump’s poli­cies are a greater threat to the US farm­ers. Com­pound­ing the mat­ter is the fail­ure of the Trump ad­min­is­tra­tion to re­lease any in­for­ma­tion on how Wash­ing­ton plans to help the farm­ers.

In­ter­est­ingly, Trump has said US farm­ers are “great pa­tri­ots” and he can’t tol­er­ate the trade deficits with China. So wouldn’t it be good if the US farm­ers dis­play their pa­tri­o­tism by help­ing to nar­row the trade deficits with China?

That is also what is sought by John Heis­dorf­fer, pres­i­dent of ASA, which lob­bies for 21,000 US pro­duc­ers of soy­bean. “Soy­bean farm­ers want to be an es­sen­tial part of help­ing lower our trade deficit with China,” Heis­dorf­fer said at a con­gres­sional hear­ing on Thurs­day. “We be­lieve that ex­pand­ing mar­ket ac­cess can play a vi­tal role in in­creas­ing our agri­cul­tural trade sur­plus.”

But will Trump pay heed to the call of US farm­ers?

“Ev­ery­body there in­sisted and re­ally made their point to the pres­i­dent that we wanted trade, not aid.”

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