Organizations react to China tariff increases

IOWA CATTLEMEN'S ASSOCIATION

     Iowa’s agricultural products, including beef, have become victims of a trade war meant to benefit the US manufacturing industry.

     In addition to a 25 percent tariff on pork and ethanol that went into effect on April 2, the Chinese government announced a proposal to increase tariffs on US soybeans, corn and beef by 25 percent. The April 4 proposal was made in retaliation for tariffs levied by the Trump administration on Chinese products.

     “The Chinese export market for beef has been growing since 2017, when US beef was allowed into China for the first time since 2003,” says Matt Deppe, CEO of the Iowa Cattlemen’s Association. “An additional 25 percent tariff, on top of the 12 percent tariff currently in place, definitely has the potential to slow that growth and ultimately, hurt our Iowa cattle producers.”

     According to the US Meat Export Federation, US beef exports to China totaled 3,020 metric tons valued at $31 million in the second half of 2017, following the market reopening.  In January 2018, exports reached the highest monthly volume to date at 819 metric tons, valued at $7.5 million.

     “It’s not surprising that China retaliated through agricultural tariffs. The US truly feeds the world, and exports are an important market for farmers, especially in Iowa,” says JanLee Rowlett, government relations manager for the Iowa Cattlemen’s Association. “These proposed tariffs have already affected corn, soybean and cattle futures, and our top priority now is ensuring that they do not go into effect. We are hopeful that the Trump administration can resolve this trade war before farmers are hurt any more.”

     The Iowa Cattlemen’s Association policy, developed and ratified by its 10,000 members across the state, supports trade agreements that benefit beef producers. Following US withdrawal from the Trans Pacific Partnership, an agreement that included 11 other countries, including several major US beef importers, ICA’s focus has been on preserving the positive aspects of NAFTA and advocating for bilateral trade agreements, like the recently renegotiated US - Korea Free Trade Agreement (KORUS) which includes favorable terms for US beef exports to South Korea.

     Iowa has over 27,000 cattle producers and is fourth in the nation for cattle on feed. The majority of Iowa’s beef producers are also corn and soybean farmers, and the tariffs on ethanol, corn, and soybeans are also concerning, given the current agricultural economy. US net farm income is expected to fall in 2018 for the 4th time in 5 years.

IOWA SOYBEAN ASSOCIATION

     China’s proposed 25 percent tariff on U.S. soybean imports was anticipated by the industry. The country is very politically astute and had promised to respond in-kind to tariffs announced by the White House. China has followed through on that promise.

     Trade issues between China and the U.S. are not new. Iowa soybean farmers understand there are legitimate issues needing resolution, particularly those involving intellectual property rights. We appreciate the importance of these matters and encourage additional dialogue between the two countries to resolve them.

     It’s important to note that the announced tariffs on U.S. soybeans have not been imposed; they are targets.

     That said, China’s proposed tariff on U.S. soybean imports is disconcerting for Iowa farmers poised to plant this year’s crop. Short term, the volley of proposed tariffs between the countries will negatively impact soybean prices. Long-term, an ongoing trade dispute with China risks stoking anti-Americanism sentiment that could jeopardize the strength of trade relations between the two countries – relationships that have taken U.S. soybean farmers nearly 35 years to develop.

     China is a significant player in the global soybean market. The country consumes nearly 62 percent of all soybean exports. Approximately 33 percent of total U.S. soybean production is destined for China, fulfilling almost 40 percent of China’s total soybean imports. Therefore, both stand to lose if this trade dispute escalates.

     A study recently conducted by Purdue University on behalf of U.S. soybean farmers finds that a 30 percent tariff on U.S. soybeans could result in a 71 percent reduction in soybean exports from the United States to China. Total U.S. soybean production would decline by 17 percent. The study also indicates reductions of:

     • U.S. producer soybean prices by 5.2 percent.

     • U.S. economic welfare by $3.3 billion.

     • Chinese economic welfare by $2.6 to $8.4 billion.

     China needs U.S. soybeans. The U.S. soybean farmer needs China. It is our hope that U.S. and Chinese officials will quickly transition from politics and posturing to resolving this escalating trade dispute for the benefit of American farmers and our Chinese customers.

MIKE NAIG, IOWA SECRETARY OF AGRICULTURE

     China’s recent announcement of retaliatory tariffs on a number of U.S. agricultural products is concerning.  Tariffs on pork products and ethanol went into place this Monday and China has announced additional duties on soybeans, corn and beef that could take effect in a couple of months.

   While there are real challenges in our trade relationship with China, Iowa agriculture stands to face a disproportionally negative impact as a result of efforts to correct these issues.

   These new trade barriers create additional hurdles to farmer profitability that has already been in decline for the last four years.  As Iowa farmers get ready to enter the fields and plant their crops, the recent actions add to the economic uncertainty being felt across the state.

   The potential impact of these trade barriers on Iowa agriculture is dramatic. The U.S. exports $1.16 billion worth of pork products to China.  One quarter of our state’s soybean crop goes to China.

   Our office has been coordinating with the Governor’s office and been in contact with USDA and the Iowa Congressional delegation to urge a swift resolution to this issue.