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U of I & OSU: Hundreds of ag goods now targeted by tariffs

By TIM ALEXANDER

BLOOMINGTON, Ill. — More than 800 U.S. food and agricultural products have been targeted with retaliatory tariffs from China, Canada, Mexico, the European Union (EU), and Turkey – several of the United States’ major export markets.

This is the study of economists from the Department of Agricultural and Consumer Economics at the University of Illinois and the Department of Agricultural, Environmental, and Development Economics at The Ohio State University, in a Gardner Policy Series essay posted April 11.

“Among all retaliating countries, China has responded with the most expansive list of retaliatory tariffs, including almost all imports of agricultural and related goods from the United States. As a result, the value of 2018 agricultural exports to China were less than half the annual value for each of the three prior years,” The Trade Conflict – One Year Later concludes.

“China is the only country to have levied retaliatory tariffs on soybeans, but that alone has significant impact, given that China in recent years purchased more than half of U.S. soybean exports. As a crop that relies heavily on exports as a market, less demand in the world market pushes the farm price lower.”

The genesis of the Trump administration’s “tariff war” can be traced to March 1, 2018, when the President announced he would use existing authority to impose tariffs on imports of steel and aluminum. The tariffs, he said, were justified as a response to Chinese theft of U.S. intellectual property rights and technology policies.

The U.S. agriculture sector was among the first victims of retaliatory tariffs from China, Canada, and elsewhere. How much more bending over backwards to defend the priorities of the administration the ag sector is willing to undertake is a question many are asking, according to Adam Nielsen, director of national legislation and policy development for the Illinois Farm Bureau (IFB).

“The (Gardner Policy Series) report does a nice job of documenting the impact of the tariffs one year later. We are still seeing our commodities and other food exports subjected to significant tariffs that are making them not competitive in the world market, along with a sharp reduction in the number of exports in the past year to major trading partners like China and Mexico,” said Nielsen.

“Our members are still feeling the pain. The (USDA) Market Facilitation Program helped ease some of that pain last year, but now it is planting season with little progress and no accomplishments. People are starting to get impatient.”

Recent reports that China had purchased a quantity of U.S. soybeans are difficult to confirm, the trade expert said. “It’s kind of hard to follow the reporting there. But apparently, the timetable for a deal has lengthened from the president’s March 1 milestone.

“I guess when we see a deal, we know it has occurred, but for now we urge the administration to continue the dialogue with China and come to an agreement.”

As for the proposed United States-Mexico-Canada Agreement (USMCA), all sides are currently at a stalemate. Nielsen reiterated statements he made in January warning that it will not be ratified by either Canada or Mexico until the U.S. removes its tariffs on foreign steel and aluminum.

“Everyone is holding firm to their positions right now. There is a recognition that at some point those tariffs would come off and be transferred into a quota or some other remedy, but USMCA will not be ratified with steel and aluminum tariffs levied against them. In addition, Canada is threatening to impose additional tariffs on American products such as ethanol. They appear to be willing to up the ante,” he explained.

The IFB and American Farm Bureau Federation are continuing to work with members on both sides of the aisle, Nielsen added. As part of the Farmers for Free Trade coalition, he and other Farm Bureau officials have been traveling to rally support for eliminating or reducing the U.S. tariffs on exports and passing key export trade agreements that benefit farmers.

“We are under pressure to get any action done prior to August, when this will get sucked into the presidential (election) cycle. We are running hard, and we are going to run through the tape, but I hope they don’t push the finish line three miles out into the future,” he said.

An upcoming “part two” of the Gardner Series report, which will examine the financial ramifications of the tariff wars on Illinois agricultural exports, will soon be issued by the University of Illinois farmdoc team. Kristy Swanson, Jonathan Coppess, and Gary Schnitkey of the U of I, and Carl Zulauf of OSU, are the credited authors of the initial report.

5/9/2019