Perdue Worried About Tariffs

Steel and Aluminum Tariffs Would Increase Costs for Agricultural Equipment as Well

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Agriculture Secretary Sonny Perdue, right, spoke in a question-and-answer forum Wednesday at the USDA headquarters at an event sponsored by the Wall Street Journal. Paul Gigot, editorial page editor for the WSJ, questioned Perdue on trade and regulatory issues. (DTN photo by Chris Clayton)

WASHINGTON, D.C. (DTN) -- Count Agriculture Secretary Sonny Perdue as among those worried about the impact of steel and aluminum tariffs that President Donald Trump has said he is committed to implementing on imports.

Perdue didn't exactly defend the president's plan to implement a 25% tariff on steel and a 10% tariff on aluminum imports during a question-and-answer forum Wednesday at the USDA headquarters sponsored by the Wall Street Journal. Paul Gigot, editorial page editor for the WSJ, immediately pointed out the European Union threatened to impose tariffs counter tariffs against the U.S. for as much as $3.52 billion in value.

Perdue noted farmers and agricultural sectors are legitimately nervous about the risks of a trade war.

"There are probably some legitimate anxieties over the trade issues," Perdue said. "I don't know if we could be properly soothed that he (Trump) told Mexico or Canada that this may be a way to get a NAFTA deal done, using steel tariffs in that way. But I think those of us in the agricultural sector are rightfully concerned and somewhat anxious over retaliatory measures, particularly."

A spokeswoman for the White House said Wednesday that the president still plans to announce his tariff decision sometime before the end of the week.

On the other side of the Atlantic on Wednesday, European Union Trade Commissioner Cecilia Malmstrom said the EU also would challenge the U.S. steel and aluminum tariffs in a World Trade Organization case against the U.S. Malmstrom said the list of items would be released soon of all of the products the EU would target, but she mentioned bourbon, cranberries, orange juice and peanut butter as some specific food and agricultural products.

Perdue noted agriculture is often the tip of the spear on retaliatory actions, but Perdue said President Trump is a different type of leader and those concerns about retaliation may not factor into his decisions.

Perdue added that he's hopeful the tariffs could be moderated. The agriculture secretary also said there are opportunities that could come from the president's negotiating strategies when it comes to tariffs. Trump also has left a window open to be flexible on the tariffs.

"There are some negotiating strategies here that could be very beneficial not just to agriculture but to the rest of the economy," Perdue said.

The agriculture secretary specifically pointed to the lack of action by Canada in the NAFTA talks and possibility that the steel and aluminum tariffs could make Canada more willing to negotiate and offer better market access for agricultural products. Still, Perdue noted retaliation isn't the only concern for agriculture.

"As you know, farm equipment is manufactured with steel and aluminum and we're concerned about not only retaliation but also the costs of other inputs as we go forward," Perdue said.

Looking at pulling out of NAFTA, Perdue said USDA economists are still working on an analysis on impact that would have on agriculture, but "no question about it" the effect would be negative, he said.

Perdue added that the steel industry needs to recognize the impacts of technology and changes in global metal industries in recent decades. Perdue was trying to make a point about the value of innovations and technology in agriculture. He said research is needed to understand why some industries have been in decline while others adapt and thrive.

"The steel industry needs to look at themselves and see why we are behind when after World War II we were at the top of the food chain," Perdue said, adding "Do we bear some responsibility over why parts of that industry has left?"

While Perdue spoke, Congress continues to express its concern about tariffs. The Iowa congressional delegation sent a letter Wednesday to President Trump urging him not to impose the tariffs because of harm to farmers and manufacturers. The Iowa congressmen and senators said the steel and aluminum tariffs "could set into motion a chain of retaliatory measures, hurting Iowans from the family farm to the family-owned manufacturing plant. Tariffs are a tax on families and hardworking Iowans cannot afford a trade war."

Chris Clayton can be reached at Chris.Clayton@dtn.com

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Chris Clayton