Saturday, April 14, 2018

A trade war by any other name

If it's a trade war you want, it's a trade war you'll get.
That's paraphrasing a response from China's embassy in Washington last week in response to President Trump targeting over 1,300 Chinese exports for tariff earlier this month. In traditional Chinese style, the warning was issued in much friendlier language, a polite response – but perhaps a strong warning.
"As the Chinese saying goes, it is only polite to reciprocate," the embassy noted after Trump's announcement.
Chinese officials in Beijing echoed those polite sentiments later, saying they fully intend to take up the matter with the World Trade Organization and will subsequently impose "corresponding measures of equal scale and strength" again U.S. products traded to China.
Already China has confirmed they will enact tariff requirements on several U.S. goods, specifically an increase in tariffs by up to 25 percent on 128 U.S. products, from frozen pork and wine to certain fruits and nuts and more. Chinese officials say the tariffs will target up to $3 billion in U.S. goods, but warns additional U.S. exports are subject to be included depending on the U.S. response.
Some say the current trade dispute and subsequent trade war with China will be little more than a tit-for-tat exchange, meaning "equivalent retaliation from both sides." As President Trump imposes tariffs on Chinese exports, the Chinese will respond with an equal number of tariffs on U.S. goods, according to some analysts a push and shove contest that in reality nets little or no gains for either side.
None-the-less, the threat of a U.S. trade war with China (which officially would begin only after a May 15 public hearing in the U.S. concerning the president's tariff recommendations against China). But that hasn't stopped verbal rhetoric and barbs from trade officials on both sides of the issue.
In the interim, U.S. producers, including the U.S. agriculture industry and its many support groups, have expressed major concerns over possible planned Chinese tariffs on U.S. agricultural products, including pork and soybeans among others.
But earlier this week President Trump asked the U.S. Department of Agriculture for options to assist farmers negatively impacted by the recent trade developments, an apparent effort to boost the support of U.S. farmers who are increasingly more concerned over a potential major trade war, not only with China, but potentially with Mexico, Canada and others...MORE

We have published Ag's concerns. See:

China threatens $16.5B in tariffs against U.S. ag 

America's Cattlemen and Women are "Unfortunate Causalities" in Any Trade War 

Farm Bureau Concerned About Possible Chinese Trade Retaliation

And late last year noted:

China Tops Canada As Lead Buyer of U.S. Ag Goods 

This is our #1 trading partner for ag products so the potential to cause harm to our farm and ranch families is great, and the reason the ag groups are expressing their concerns. In response, Trump is seeking ways to provide "additional support" to those negatively impacted. That has problems too, as the article continues: 

But Bloomberg reported earlier this week that leading lawmakers on congressional agriculture committees said they are skeptical that the White fHouse can fix any economic harm for farmers arising from a trade dispute with China by giving them temporary aid through USDA, a sentiment also expressed by Republican Senator Pat Roberts of Kansas, chairman of the Senate Agriculture Committee.
"We don’t need another subsidy program, we need to sell our product. If we do that, we don’t need some sort of crazy-quilt program," Roberts told reporters.
Skeptics also quickly responded that any special programs like tapping the Depression-era’s Commodity Credit Corporation, established in 1933 to help stabilize family farm incomes through a price-support system, would only further increase the federal debt and could only be sustained for a short period of time.
Farm groups are suggesting the best solution is to not start a trade war.

Agriculture is one of the few areas where we have a trade surplus and  ag exports have a value of $140 billion. That accounts for 20 percent of total ag production. Or expressed another way, 1 out of every 5 acres harvested is exported. For beef 13 percent of total production in 2017 was exported with a value of $7.3 billion,

Make no mistake, this is a big deal for agriculture and rural communities.

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