NAFTA partners slapped with steel, aluminum tariffs

Legislative Watch: Tariffs on Canada, Mexico and EU steel and aluminum; China tariffs on table; bill helps haulers’ hour of service; act would increase interstate meat sales; label changes delayed; farmers’ food dollar share dwindles.

P. Scott Shearer, Vice President

June 1, 2018

5 Min Read
NAFTA partners slapped with steel, aluminum tariffs

President Trump is moving forward to slap tariffs on steel and aluminum imports from Canada, Mexico and the European Union. The administration had previously given an exemption as long as progress was being made on North American Free Trade Agreement negotiations and EU trade talks. The exemptions expire today.

The EU has already notified the World Trade Organization of plans to impose duties on $7.1 billion worth of U.S. exports in response. Canada and Mexico have threatened retaliation, but have not indicated which U.S. products will be hit.

This announcement along with the one regarding China and tariffs moves the United States closer to a global trade war. Agriculture is the sector that suffers the most from trade wars.

Trump puts tariffs back on the table for China
The White House announced that President Trump plans to move ahead with imposing 25% tariffs on $50 billion worth of Chinese products as a means to protect U.S. intellectual property. The list of Chinese products will be announced June 15. Also, the administration will impose investment restrictions and strengthen export controls as a means to stop Chinese acquisition of “industrially significant” technology.

This announcement comes a week after Secretary of the Treasury Steven Mnuchin said the trade war between the United States and China was “on hold.” This announcement by the White House increases the trade tensions between the United States and China as Secretary of Commerce Wilbur Ross arrives in Beijing for further talks June 2-4.

China says it will defend its interests and will retaliate. This is a major concern for U.S. agriculture, especially for U.S. soybeans in which China has listed as one of the products it has threatened to impose a 25% tariff.

Earlier this year, China imposed a 25% tariff on U.S. pork in retaliation to the United States imposing tariffs on Chinese steel and aluminum. The National Pork Producers Council says U.S. pork producers have lost $2.2 billion on an annualized basis due to events leading up to and following the Chinese decision to impose tariffs on U.S. pork. Dermot Hayes of Iowa State University says not all of the lost value “can be attributed to trade friction with China, it is certainly the main factor.”

Livestock haulers bill helps on hours of service
Bipartisan legislation by Sens. Ben Sasse (R-NE) and Heidi Heitkamp (D-ND) has been introduced in the Senate to help ease the burden for livestock haulers in dealing with the Hours-of-Service and Electronic Logging Devices regulations.

Sasse says, “The Department of Transportation’s current regulations endanger livestock during hot summers and cold winters — which Nebraskans know well — causing significant stress on the animals and concern for the drivers. This bipartisan bill is good for our ranchers, good for our haulers, and good for our livestock.”

The legislation:

• Provides that HOS and ELD requirements are inapplicable until after a driver travels more than 300 air miles from their source. Drive time for HOS purposes does not start until after 300 air mile threshold.

• Exempts loading and unloading times from the HOS calculation of driving time.

• Extends the HOS on-duty time maximum hour requirement from 11 hours to a minimum of 15 hours and a maximum of 18 hours of on-duty time.

• Grants flexibility for drivers to rest at any point during their trip without counting against HOS time.

• Allows drivers to complete their trip — regardless of HOS requirements — if they come within 150 air miles of their delivery point.

• After the driver completes their delivery and the truck is unloaded, the driver will take a break for a period that is five hours less than the maximum on-duty time (10 hours if a 15-hour drive time).

On Dec. 18, 2017, the U.S. Department of Transportation Federal Motor Carrier Safety Administration required commercial vehicle drivers to install an ELD in their truck to track compliance with HOS rules. Congress has exempted livestock haulers from the FMCSA requirements until Sept. 30.

Legislation would increase interstate sales of state-inspected meat
Sens. Mike Rounds (R-SD) and Angus King (I-ME) have introduced the “New Markets for State-Inspected Meat and Poultry Act.” The legislation allows meat and poultry products inspected by state meat and poultry inspection programs to be sold across state lines.

The Senators pointed out that currently there are 27 states with inspection programs certified by the Food Safety Inspection Service, which meet federal inspection standards. Products processed at these FSIS-approved state MPI-inspected facilities, however, are not allowed to be sold across state lines.

Rounds says, “At a time of economic downturn within the ag sector, opening up new markets for South Dakota producers is critically important. Currently in South Dakota, cattle, sheep, swine and goat products are limited to markets within the state even though they are required to go through inspection at an FSIS-approved state facility. Because the state inspection programs are required to be ‘at least equal to’ or better than the federal inspection standards, products that pass state inspection should be able to be sold across state lines. Our bipartisan, commonsense bill will create new markets for producers and give consumers more choices at the grocery store, while continuing to maintain the high quality and safety standards necessary to keep consumers healthy.”

Nutrition labeling changes delayed
The Food and Drug Administration is delaying the compliance deadline for changes in nutrition labeling until Jan. 1, 2020, for companies with more than $10 million in annual food sales, and Jan. 1, 2021, for companies with less than $10 million in annual food sales. This new deadline will align with the new requirements that companies will have to meet for the GMO labeling requirements. The nutrition labeling requirements deadline was to be July 26.

Farmers share of food dollar hits 15-year low
The farmer’s share of the food dollar hit a 15-year low in 2016 according to USDA’s Economic Research Service. The share which is the portion of every dollar that consumers spend on food that is allotted to food producers hit 14.8 cents. This is a 5% decline from 2015.

The producer’s share changed a great deal for some products. Beef producers earned $0.22 for every dollar consumers spent on steak compared to $0.44 in 2014. Pork producers are receiving $0.17 compared to $0.30 in 2014. Milk producers received $0.30 of the dollar spent on milk, compared to approximately half of the dollar spent in 2014.

ERS has been reporting the farmer’s share of the American food dollar since 1993.

About the Author(s)

P. Scott Shearer

Vice President, Bockorny Group, Inc.

Scott Shearer is vice president of the Bockorny Group Inc., a leading bipartisan government affairs consulting firm in Washington, D.C. With more than 30 years experience in government and corporate relations in state and national arenas, he is recognized as a leader in agricultural trade issues, having served as co-chairman of the Agricultural Coalition for U.S.-China Trade and co-chairman of the Agricultural Coalition for Trade Promotion Authority. Scott was instrumental in the passage of China Permanent Normal Trade Relations and TPA. He is past chairman of the USDA-USTR Agricultural Technical Advisory Committee for Trade in Animals and Animal Products and was a member of the USAID Food Security Advisory Committee. Prior to joining the Bockorny Group, Scott served as director of national relations for Farmland Industries Inc., as well as USDA’s Deputy Assistant Secretary for Congressional Affairs (1993-96), serving as liaison for the Secretary of Agriculture and the USDA to Congress.

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