Back in April, President Trump was quoted as saying to Secretary of Agriculture Sonny Perdue: “You can assure your farmers out there that we’re not going to allow them to be the casualties if this trade dispute escalates. We’re going to take care of our American farmers. You can tell them that directly.”
This statement is revealing. The President is acknowledging the significant and precarious position of American agriculture in the world of international trade agreements. American farmers produce a product that the rest of the world wants, which makes our industry an easy target for retaliatory tariffs.
With the current escalation of trade tensions between the United States and its historical trading allies, agriculture once again finds itself in the crosshairs of international political posturing. At the end of May, the initial reprieve from steel and aluminum tariffs granted to Canada, Mexico and the European Union expired. A series of retaliatory measures, including those aimed at American agricultural products, quickly followed. After a tense and hostile G7 summit in Canada in early June, these retaliatory tariffs are all but certain to kick in [not to mention the ongoing tit-for-tat trade measures with China].
I understand what the Trump administration is trying to accomplish. The scales of international trade are undeniably tilted in favor of our trading partners, a balance that began to tip during the late 1970s. While freer trade has benefited many American farmers, including those in the produce industry—in fact, we are now exporting more fruits and vegetables than ever before, nearly triple pre-NAFTA numbers—it is hard to ignore our perennial balance of trade deficits. I believe any rational supporter of free trade would agree that the United States could benefit from fairer deals with our trading partners. Thus, I applaud the President for getting tough on trade.
However, there is a limit to the burden that agriculture should be asked to bear as the collateral damage of a broader trade war. The Trump administration should work to adopt measures to protect our industry from any potential fallout. In short, we expect the President to follow through on his promise to “take care of our American farmers.”
Many farmers may be unwilling to swallow a bitter pill now in order to help reset our trade relationships and benefit the American economy in the long run, so we must see some type of plan unveiled to mitigate the losses agriculture is and will continue to experience so that we can gain their support. Stakeholder input will be critical to developing an adequate mitigation plan, and we will work with USDA to pursue strategies that benefit not only our produce industry, but all of agriculture.
It is estimated that American producers will face hundreds of millions, if not billions, of dollars in lost export opportunities due to retaliatory tariffs. Furthermore, the increased supply of fruits and vegetables that would have otherwise been exported will flood the domestic market, lowering prices and exacerbating the damage already being done to American farmers.
While it is easy to get caught up in the tariff talk, an equally important concern must also be addressed by the Trump administration if we are going to truly level the playing field: non-tariff trade barriers. As an example, our government has long-reported to Congress that China unevenly implements its World Trade Organization obligations by erecting non-tariff trade barriers to U.S. agriculture. Indeed, the Chinese import and inspection system is frequently used to impede American agricultural products from entering the country.
More broadly, other countries also use non-tariff measures—including pseudo-science—to block our export opportunities. In recent years, we have railed against barriers to apple exports to Mexico, as well as the illegitimate use of sanitary and phytosanitary standards in several Asian countries to delay or prevent our access to foreign buyers. Furthermore, we are concerned about the increasing use of divergent maximum residue standards, which have gone from a legitimate tool to protect public health and safety to a tool to protect domestic markets. Any renegotiation of our trade deals must include a more transparent, predictable and truly science-based trading system.
President Trump is embarking on an aggressive path to rebalance American trade. He knows that taking this approach will put American agriculture in harm’s way. We urge the President to fulfill his promise to mitigate any harm that befalls the industry so we will not become “the casualties” of an escalating trade war.
(Editor’s Note: An excerpt of this column appeared in the 06/15/18 edition of The Packer.)
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