Washington Insider -- Friday

Coordinated Pushback on Tariffs

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

USDA Spells Out Farmer Trade Aid Payments

USDA used a three-step process to determine damages caused by unfair trade practices deployed by US trading partners against U.S. agriculture, setting the stage for efforts USDA has announced -- the Market Facilitation Program (MFP) and Food Purchase and Distribution Program.

The three steps USDA used are like those used in other trade disputes, with a "white paper" issued by the Office of the Chief Economist (OCE) noting this was the same process used in the US Country of Origin Labeling dispute case. The WTO "awarded trade damages of approximately $1 billion to Canada and Mexico based on the gross trade value of their lost livestock exports to the United States due to the COOL measure," the white paper said.

The effort focused on countries putting retaliatory tariffs in place on US ag products, including Canada, China, the European Union (EU), Mexico and Turkey.

The three steps:

Step 1: Trade value without the retaliatory tariff from a particular country.

Step 2: Trade value with the retaliatory tariff from a particular country.

Step 3: Take the difference of the two as the "trade damage" due to the tariff.

OCE used actual 2017 trade data "as a proxy for the expected value of trade without the retaliatory tariff using import data from Canada, China, the EU, Mexico, and Turkey."

While a WTO case unfolds over time, allowing for several years of trade data to be used, the effort USDA pursued used "a global trade model to estimate what the value of trade is expected to be after the imposition of the tariffs."

For more details on the calculations see the DTN story "USDA Details Trade Aid Metrics."

Trump Blames Sen. Stabenow for Holding Up Farm Bill

President Donald Trump took to Twitter Thursday to blame Senate Ag Committee Ranking Member Debbie Stabenow, D-Mich., for preventing the farm bill from being completed.

"Senator Debbie Stabenow and the Democrats are totally against approving the Farm Bill," Trump tweeted. "They are fighting tooth and nail to not allow our Great Farmers to get what they so richly deserve. Work requirements are imperative and the Dems are a NO. Not good!"

Stabenow, however, countered with a tweet of her own, pointing out, "In case you missed it, the Senate passed a bipartisan #FarmBill that got 86 votes - the most ever. I'm not letting politics distract me from working across the aisle to finalize a good bill that will deliver certainty for farmers and families in Michigan and across the country."

Meanwhile, House Ag Committee Chairman Mike Conaway, R-Tex., welcomed Trump's comments, telling reporters that Stabenow has "got to come to the table and so far from my perspective, I'm not getting the kind of negotiating out of her that gets us to a deal."

However, indications are that the nutrition program area is not the only portion of the bill where House and Senate negotiators remain apart. And Senate Ag Committee Chairman Pat Roberts, R- Kan., has already signaled the potential for getting the bill done before the end of September is getting less likely.

Washington Insider: Coordinated Pushback on Tariffs

The New York Times is reporting that a new, coordinated effort by American businesses is attempting to do "what they could not do before" concerning U.S. tariff policies. Business officials have testified, tweeted, written and called the White House with their concerns — efforts that have largely failed, the Times says. Now they are mounting a last-ditch effort to convince the president that his trade policies are hurting his political base.

In a multimillion-dollar campaign that includes television advertisements, rallies in targeted congressional districts and online persuasion efforts, companies and business groups led by the National Retail Federation and an agricultural group called Farmers for Free Trade are highlighting the damage the tariffs are bringing to companies and workers in states with large numbers of Trump supporters.

The effort, called Tariffs Hurt the Heartland, focuses heavily on the economic pain that manufacturers claim is being inflicted upon industries that Mr. Trump champions and patches of the country that lifted him to the White House. It includes nearly 90 industry trade groups, like the Consumer Technology Association, the National Lumber and Building Material Dealers Association and the Toy Association.

"We're obviously trying to reach the White House," said David French, the retail federation's senior vice president for government relations, "and we're trying to deliver a narrative to the White House that is clear and unambiguous, about the breadth of communities where the consequences of these tariffs will be felt."

But, there's a problem, NYT says. To persuade the president, companies must first win over the public, especially the most loyal supporters who continue to back his trade policies by a wide margin. "Eighty percent of Republicans support the steel and aluminum tariffs," the Times says.

That tension between business groups, which have cheered Republicans over tax cuts and efforts to reduce federal regulation, and the Trump political base has proved difficult for many Republican members of Congress to navigate. Though many have spoken out against some or all of the tariffs, the Republican-held House and Senate have taken few concrete steps to push back against its policies.

The most vocal opponents have been businesses, which have found their entreaties repeatedly rebuffed by a president who has continued to threaten an escalating series of tariffs on goods from China, Canada and the European Union.

Apple, Ford and General Motors, along with hundreds of smaller businesses, have all publicly warned the administration that tariffs will hurt the very companies it wants to protect, at the expense of American jobs and economic growth. The administration's response: Make your stuff in the United States, the Times says.

Mr. Trump imposed tariffs on imported steel and aluminum from several countries, and on $50 billion worth of goods from China, a country his administration says is violating the norms of international trade. The president appears set to complete a second round of tariffs on China, on as much as $200 billion in imports, and has said he is willing to move quickly to a third round that would encompass all Chinese imports — including many everyday household items like apparel, electronics and other consumer products. He has continued to threaten tariffs on cars imported from the European Union and Canada.

That has raised the stakes for American businesses, which face higher costs to source material and products from abroad and retaliation from other nations that has made it harder to sell products into foreign markets.

Business owners have found sympathetic ears among lawmakers and the White House, but little action. This has prompted a more coordinated effort to try to show how tariffs hurt American consumers and businesses by raising prices.

Economic data have yet to show a surge of price increases related to tariffs. That fact, many business leaders acknowledge, is working against their pitch. Trade groups and executives say that could quickly change if Mr. Trump follows through with additional tariffs on Chinese products.

The Federal Reserve's Beige Book, which collects anecdotes from business contacts across the country, noted increased warnings of price pressures from tariffs in its latest edition released on Wednesday — though Fed officials have said they have yet to see such warnings translate into increased inflation.

"Tariffs were reported to be contributing to rising input costs, mainly for manufacturers," the Beige Book said. "Businesses' input costs have generally been rising more rapidly than selling prices, though there have been increased efforts to pass along cost hikes to customers."

It is clear that a number of key administration staff members, including Secretary of Commerce Ross, U.S. Trade Representative Lighthizer and trade advisor Navarro strongly support the "get tough" tariff approach, and do not believe it threatens domestic markets. The Times report emphasizes the political support for that view, in spite of growing business opposition.

Thus, it seems that efforts to reverse the support for the administration's trade fight face an uphill battle. This is a fight producers are already supporting in many cases, and which should be watched closely as it intensifies, Washington Insider believes.

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, USFarm Bill and DTN Ag News sections on their News Homepage.

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