Trump plan for tariffs on $60 billion of Chinese products raises concerns

Legislative Watch: More tariffs, and more fear of retaliation; omnibus spending package passed, veto threatened; delay of hog inspection rule requested; Mississippi Senator has ag background; Ag Day celebrated.

P. Scott Shearer, Vice President

March 23, 2018

6 Min Read
Trump plan for tariffs on $60 billion of Chinese products raises concerns
Getty Images/Drew Angerer

President Trump announced the United States will be imposing tariffs on $60 billion of Chinese products due to China’s theft of intellectual property. Reports are 1,300 Chinese products are under consideration. This latest action is causing concerns among Congressional members, industries and agriculture of the expected retaliatory reaction China will take and the increasing potential of a trade war.

In a statement the Chinese Embassy says, “China does not want a trade war with anyone. But China is not afraid of and will not recoil from a trade war. If a trade war were initiated by the U.S., China would fight to the end to defend its own legitimate interests with all necessary measures.”

U.S. agriculture is very concerned it will feel the brunt of any reaction China will take against U.S. products. Indications are China is preparing a list of items that could be targeted, including soybeans, grain sorghum and live hogs.

The American Soybean Association says, “Agriculture is not like other industries that can sustain extreme volatility in markets and prices. If demand drops and prices collapse, soybean farmers will go out of business. Not in five or 10 years, but this year and next. Trade is an existential issue for soybean farmers. We export over half of our crop. China is the largest driver of world demand for soybeans. The tough line the administration is taking on China will lead to retaliation that will cost many farmers their livelihoods.” China is the No. 1 export market for U.S. soybeans accounting for more than 30% of exports valued at $14 billion.

The administration will publish a proposed tariff list within 15 days for public comments. The tariffs will go into effect within 60 days after the public comment period.

Tariffs on aluminum and steel begin today and China reacts
As tariffs on imported aluminum and steel proposed by President Trump take effect today, China announced plans to hit back against the United States. China has developed a list of 128 U.S. products that it plans to impose $3 billion in reciprocal duties. Included is a 25% tariff on U.S. pork imports and 15% tariffs on American steel pipes, fresh fruit, dried fruits and nuts, modified ethanol, and seamless steel pipes.

The National Pork Producers Council says, “We sell a lot of pork to China, so higher tariffs on our exports going there will harm our producers and undermine our economy. No one wins in these tit-for-tat trade disputes, least of all the farmers and consumers.”

Companies have been filing requests this week with the Department of Commerce asking to be excluded from the tariffs on imported steel and aluminum products that are to take effect today. They are concerned the tariffs will raise the price of manufactured products, cause retaliation, and increase the potential of a trade war. A number of countries have been meeting with administration officials trying to negotiate exemptions. So far, the administration is giving exemptions to Canada and Mexico during the North American Free Trade Agreement negotiations and just announced exemptions for South Korea, Australia, Brazil and the European Union. There were 50 countries that exported steel and aluminum to the United States in 2017.

According to the Department of Commerce, exclusions will be granted “if an article is not produced in the United States in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for a specific national security consideration.” Secretary of Commerce Wilbur Ross says in a statement, “These procedures will allow the administration to further hone these tariffs to ensure they protect our national security while also minimizing undue impact on downstream American industries.”

The Commerce Department is estimating there will be 4,500 requests to be excluded from steel tariffs of 25% and 1,500 requests for exemptions from the 10% tariff on aluminum.

FY ’18 omnibus spending passed
Congress has passed a $1.3 trillion fiscal year ’18 omnibus spending bill that will keep the federal government funded through the end of fiscal year ’18 (Sept. 30). President Trump this morning threatened a veto even though the White House had earlier told Congressional leaders he would sign the bill. In the end he will to sign the bill to avoid a government shutdown.

The bill includes a number of items important to agriculture.

Co-op tax fix: The bill includes a fix to the Section 199A tax benefit for farmer cooperatives. The 199A provision of the recently enacted tax bill gave an unintended tax advantage to producers who sold to cooperatives instead of selling to private sector elevators and businesses.

Congressional members were assisted by the National Council of Farmer Cooperatives and the National Grain and Feed Association in reaching an agreement.

Manure exemption: The bill also includes an exemption for livestock producers from having to report to the Environmental Protection Agency ammonia and hydrogen sulfide emissions.

High-speed internet: It includes a $600 million pilot project to provide grants and loans to expand high-speed internet service in rural areas.

ELD: A one-year delay of the Electronic Logging Devices mandate for livestock haulers is included.

Congress rejected many of the White House’s proposed cuts to agriculture.

Consumer and labor groups ask for delay in hog inspection rule
A group of consumer and labor organizations are asking USDA to delay its proposed rule on hog inspection. The proposed rule would transfer some routine line inspections to plant employees while giving Food Safety and Inspection Service inspectors time to complete other tasks.

The group is asking for an extended comment period to allow the public time to review the peer-reviewed research on public health effects once the research is completed. They say, “The public should have this information, as well as access to the completed peer review, for at least 30 days prior to the proposed rule’s comment deadline to provide for informed analysis of this rulemaking. If FSIS cannot publish a completed peer review in time for the public to consider it, the agency should suspend the rule and propose it again when the review is ready.”

Those signing the letter include the Center for Foodborne Illness Research & Prevention, Center for Science in the Public Interest, Consumer Federation of America, Food & Water Watch, International Brotherhood of Teamsters, The Humane Society of the United States, and United Food and Commercial Workers Union.

Mississippi ag commissioner named to U.S. Senate
Mississippi Commissioner of Agriculture Cindy Hyde-Smith has been appointed to the U.S. Senate to take the place of Sen. Thad Cochran who is retiring at the end of the month. Hyde-Smith will be the first woman to represent Mississippi in Congress.

She is a cattle farmer who was first elected to the state Senate in 2000 where she served as chair of the Mississippi Senate Agriculture Committee. She was elected Commissioner of Agriculture in 2011 and re-elected in 2015.

Trump honors farmers on National Agriculture Day
President Trump declared March 20 as National Agriculture Day. In a Presidential Proclamation, Trump says, “American agriculture is an integral part of our success as a nation, uniquely tied to both our country’s culture and economy. Today, and every day, we cherish our nation’s rich agricultural history and celebrate the greatness of the American farmer.”

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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