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Purdue prof: Farmers have right to worry about tariffs

WEST LAFAYETTE, Ind. — As tariff disputes continue between the United States and multiple other countries, American farmers may understandably see themselves as caught in the crosshairs, according to a Purdue University agricultural economist.

Last week, Mexico imposed tariffs of up to 25 percent on $3 billion worth of U.S. goods including pork products, apples, potatoes and some cheeses. Canada plans to implement tariffs of 10-25 percent beginning July 1, on $12.8 billion worth of U.S. steel and products such as yogurt, pizza, cucumbers, jams and jellies.

The European Union (EU) has proposed tariffs of 10-50 percent on more than $7 billion worth of U.S. products. The taxes on such items as sweet corn, milled rice, orange juice and cranberries are expected to go into effect early next month.

The actions came in response to President Donald Trump’s May 31 announcement that he was implementing tariffs of 25 percent on steel and 10 percent on aluminum imports from Canada, Mexico and the EU. On June 9, while in Quebec, Canada, for the Group of Seven (G7) summit, Trump said, “If they retaliate, they’re making a mistake.”

G7 members are the U.S., United Kingdom, Canada, France, Germany, Italy and Japan.

“I think farmers have a right to be concerned,” Purdue’s Wally Tyner explained. “I think (the agriculture industry) will continue to be the target. Farmers need to be lobbying everyone who will listen to them.

“Right now, the trade hawks have the President’s ear. Farmers have a right to be worried.”

By including agriculture products, the countries are focusing in part on Trump’s base in rural America, he said. “They’re targeting their strategy to hurt the President. This doesn’t always make economic sense, but it makes political sense.”

In an interview in May with CNBC, Wilbur Ross, U.S. commerce secretary, said tariffs that may be imposed on U.S. exports represent about 1 percent of the nation’s $18 trillion economy.

“Even if the EU does retaliate (to U.S. tariffs), and even if some others do, it still will remain unlikely to be as much as 1 percent on our economy,” he said. “Remember, just because they put tariffs on some of our products doesn’t mean those sales will go to zero. And in the case of agriculture, they may very well find other markets that are just as good.”

The Trump administration said in May it was putting tariffs against Chinese products “on hold” while the countries work to resolve trade issues. U.S. soybean growers could be hurt if the trade situation isn’t resolved, Tyner explained.

In a report written with Purdue colleague Farzad Taheripour – a research associate professor in agricultural economics – he said a 25 percent tariff imposed by China could mean a reduction of 17-32.6 million metric tons (mmts) of U.S. soybean exports to the country. Taking into consideration probable exports to other countries, total U.S. soybean exports could fall 14-20 mmts.

“These figures indicate that Chinese tariffs could seriously harm U.S. soybean exports,” the authors wrote. “The proposed Chinese tariffs will not significantly affect the global markets for corn, wheat and sorghum, or cause significant changes in the total U.S. exports of these products.”

Commodity and other ag-related groups spoke out recently about the tariffs and how they may impact U.S. farmers. Tariff threats create uncertainty in the marketplace and for soy growers, whose livelihoods depend on the ability to export their crops and products to China, said John Heisdorffer, president of the American Soybean Assoc.

“This is real money to a soybean farmer trying to determine when to sell (the) crop. Farm income is projected to be the lowest in more than five years and farmers cannot afford to have the bottom fall out now,” he said.

The National Pork Producers Council appreciates the variety of interests and issues the administration is attempting to balance during trade negotiations, said Jim Heimerl, its president. “While producers are trying hard to be good soldiers, we’re taking on water fast. The President has said that he would not abandon farmers. We take him at his word.”

Roger Johnson, president of the National Farmers Union, said while his organization supports Trump’s desire to address unfair trading practices and reduce the nation’s trade deficit, “provoking a global trade war with our closest allies hardly seems like a solution.

“Agriculture is always the first casualty of retaliatory tariffs, and it is no different in this instance. (The tariffs) could have widespread, negative consequences for family farmers and ranchers,” he said.

Tariffs announced by Mexico will have immediate and painful consequences for many U.S. farmers, said Angela Hofmann, deputy director of Farmers for Free Trade.

“Farmers need certainty and open markets to make ends meet. Right now they are getting chaos and protectionism. Over the last 25 years, American exports to Mexico have increased fivefold. Escalating tensions that have resulted in (the) tariffs put that growth at risk,” she noted.