Trade war cools down, but will it help farm­ers?

The Fresno Bee - - Front Page - BY TIM SHEE­HAN tshee­[email protected]­nobee.com

In the escalating trade war be­tween Chi­nese lead­ers and Pres­i­dent Don­ald Trump, agri­cul­ture in Cal­i­for­nia and the Val­ley stands to po­ten­tially be hit even harder than it has al­ready by tar­iffs.

Plus, a dec­la­ra­tion was made ear­lier this month by the Chi-Trump nese gov­ern­ment that it was ceas­ing all pur­chases of Amer­i­can farm prod­ucts.

Farm­ers and ranch­ers across the state shipped al­most $2.3 bil­lion worth of crops and commoditie­s to China in 2017-18. Most of those prod­ucts have been sub­jected to in­creas­ing im­port tar­iffs in the tit-for-tat ma­neu­ver­ing be­tween Trump and Chi­nese Pres­i­dent Xi Jin­ping.

had an­nounced plans to im­pose du­ties start­ing Sept. 1 on about $300 bil­lion in Chi­nese goods com­ing into the U.S. that aren’t al­ready be­ing taxed with tar­iffs, with the ef­fect of mak­ing an even wider range of prod­ucts from China more ex­pen­sive for Amer­i­can con­sumers.

The As­so­ci­ated Press reported Tues­day, how­ever, the Trump ad­min­is­tra­tion will de­lay some of those tar­iffs and drop oth­ers al­to­gether.

The par­tial re­treat on the new taxes came in ap­par­ent re­sponse to pres­sure from busi­nesses and grow­ing fears the trade war is threat­en­ing the U.S. econ­omy.

Im­port du­ties or tar­iffs add to the cost of for­eign prod­ucts com­ing into a coun­try. That means Amer­i­can ex­ports to China are more ex­pen­sive for Chi­nese con­sumers, while Amer­i­can con­sumers face higher prices for prod­ucts im­ported from China.

The lat­est U.S. tar­iffs on China planned by Trump were es­ti­mated by some econ­o­mists to cost U.S. house­holds an aver

age of $200 a year. That’s on top of the roughly $830 cost im­posed per house­hold from Trump’s ex­ist­ing tar­iffs, ac­cord­ing to an anal­y­sis by the New York Fed­eral Re­serve.

The ad­min­is­tra­tion is post­pon­ing 10 per­cent tar­iffs un­til De­cem­ber on such pop­u­lar con­sumer goods as elec­tron­ics – cell phones, lap­top com­put­ers, video game con­soles, toys and com­puter mon­i­tors – as well as some shoes and cloth­ing. “We’re do­ing (it) just for the Christ­mas sea­son, just in case some of the tar­iffs could have an im­pact” on re­tail­ers, Trump told re­porters Tues­day in New Jer­sey.

While that an­nounce­ment pro­vided some re­lief to com­pa­nies that rely on retail sales in the back-toschool and hol­i­day sea­sons, it may not do much for farm­ers who find them­selves in the cross­fire of a trade war not of their mak­ing.

Trump, through tweets and his trade rep­re­sen­ta­tives, are dueling with China over al­le­ga­tions that Bei­jing steals trade se­crets, forces for­eign com­pa­nies to hand over tech­nol­ogy, and un­fairly sub­si­dizes Chi­nese busi­nesses. The tac­tics are gen­er­ally part of China’s am­bi­tions to be­come a global leader in ad­vanced tech­nolo­gies.

But a dozen rounds of ne­go­ti­a­tions be­tween the U.S. and China have yet to pro­duce an agree­ment. Ear­lier this year, frus­trated with a lack of progress, Trump raised tar­iffs on about $200 bil­lion of Chi­nese im­ports by 15 per­cent­age points to 25 per­cent. On Aug. 1, he threat­ened to im­pose the ad­di­tional tar­iffs on Sept. 1.

While ne­go­ti­a­tions are ex­pected to re­sume in Septem­ber, the prospect of more Amer­i­can tar­iffs have prompted China to weaken its cur­rency, the yuan – a sig­nal that China plans to get tougher with the U.S. rather than back down.

PROD­UCTS GROWN IN CAL­I­FOR­NIA FACE TAR­IFFS THAT EF­FEC­TIVELY RAISE THE COST OF THEIR PROD­UCTS IN CHINA BY ANY­WHERE FROM 15 TO 90 PER­CENT, DE­PEND­ING ON THE COM­MOD­ITY.

IM­PACT ON VAL­LEY CROPS

In the mean­time, prod­ucts grown in Cal­i­for­nia face tar­iffs that ef­fec­tively raise the cost of their prod­ucts in China by any­where from 15 to 90 per­cent, de­pend­ing on the com­mod­ity.

The most re­cent in­crease in tar­iffs came in May – and prod­ucts of most sig­nif­i­cance in the Val­ley are among those bear­ing the brunt.

Al­monds ex­ported to China, for ex­am­ple, are sub­ject to a 50 per­cent tar­iff, while dairy prod­ucts face up to a 40 per­cent tax.

Other tar­iffs in­clude a tax of 26 to 65 per­cent for cot­ton, up to 55 per­cent for or­anges or re­lated prod­ucts, up to 50 per­cent for beef or beef prod­ucts, and 60 to 65 per­cent for wal­nuts, ac­cord­ing to in­for­ma­tion from the U.S. Depart­ment of Agri­cul­ture’s For­eign Agri­cul­tural Ser­vice.

Fresh tree fruit such as cher­ries, plums and apri­cots are slapped with 50 per­cent tar­iffs; for dried fruit, tar­iffs are 50 per­cent on raisins and 65 per­cent on dried apri­cots and prunes.

The cost of tar­iffs on Chi­nese goods by the U.S. does not in­clude the ex­pense of sub­si­dies paid by the Trump ad­min­is­tra­tion to farm­ers across the U.S. — in­clud­ing Cal­i­for­nia and the Val­ley — to make up for their po­ten­tial lost sales to China.

More than $8.5 bil­lion in pay­ments was made to U.S. farm­ers. Farm­ers in Cal­i­for­nia re­ceived about $76.3 mil­lion in fed­eral sub­sidy pay­ments for eco­nomic harm they may have suf­fered.

Dairy pro­duc­ers, hog farm­ers, and grow­ers of cot­ton, al­monds, cher­ries, wheat, corn, and soy­beans in the cen­tral San Joaquin Val­ley – Fresno, Kings, Madera, Merced and Tu­lare coun­ties – were paid more than $44.8 mil­lion.

An­other se­ries of sub­sidy re­lief pay­ments, with an ex­panded range of crops and commoditie­s, is be­ing planned for 201920 year.

Farm­ers in the Val­ley would rather see a ne­go­ti­ated truce in the trade war rather than rely longterm on sub­si­dies to ease the ef­fect of China’s tar­iffs, Fresno County Farm Bureau Pres­i­dent Ryan Ja­cobe­sen told The Bee ear­lier this month.

“It’s wel­come news that the pres­i­dent has put an em­pha­sis on mak­ing sure agri­cul­ture stays strong,” Ja­cob­sen said. But, he added, “we un­der­stand that it’s for the short­term, a fill-the-gap type of pro­gram to deal with the ram­i­fi­ca­tions we’ve had in this trade bat­tle.”

“For us in the in­dus­try, a res­o­lu­tion is some­thing that we badly want to see,” he said. “We’re op­ti­mistic that we’ll see some trade agree­ments come sooner rather than later; I hope we’re talk­ing about months from now rather than years.”

But some an­a­lysts sug­gest that China’s lead­er­ship may be pre­par­ing for a long trade stand­off with the U.S. – some­thing that could con­tinue for years, as the gov­ern­ment has told Chi­nese ex­porters to find new markets for their prod­ucts and re­place Amer­i­can farm goods with im­ports from Russia, Brazil and other coun­tries.

HEC­TOR AMEZCUA Sacra­mento Bee file

Daniel Men­doza roasts pis­ta­chios for Fid­dy­ment Farms in Lincoln, north­east of Sacra­mento. More than $663 mil­lion worth of pis­ta­chios were ex­ported to China by Cal­i­for­nia farm­ers in 2017-18, mak­ing the nut the most valu­able Cal­i­for­nia agri­cul­tural com­mod­ity sent to China.

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