Trump to USDA: Protect Farmers

Responding to China, President Trump Wants to Consider Even More Tariffs

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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The trade volleys between the U.S. and China have caught the U.S. farmer in the middle. The White House ordered the U.S. Secretary of Agriculture to use his authority to protect farmers as these tariff disputes elevate. (DTN illustration by Nick Scalise)

NEW YORK (DTN) -- Citing China's tariff response on farmers and manufacturers, President Donald Trump called on the U.S. trade ambassador to consider another possible $100 billion in tariffs on China. He also called on the Secretary of Agriculture "to use his broad authority to implement a plan to protect our farmers and agricultural interests."

The White House announced the president's latest tariff push on China late Thursday in response to China's decision Tuesday proposing a 25% tariff on $50 billion in U.S. products, including $16.5 billion in agricultural commodities.

The Chinese Ministry of Commerce wasted little time Friday, replying that China will fight "at any cost" and take "comprehensive countermeasures" if the United States continues its unilateral, protectionist practices, a spokesperson with the ministry said in a statement.

"On Sino-U.S. trade, China has made its position very clear. We don't want a trade war, but we are not afraid of such a war," the spokesperson said.

The Chinese Ministry added that if the United States continues its protectionism regardless of opposition from China and the international community, China will fight to the end at any cost to "protect the interests of the country and the people," according to the spokesperson. "The conflict was initiated by the United States as provocation."

The Ministry of Commerce, known as MOFCOM, also posted a news article on its website Friday from an analyst citing that Asian palm oil producers could be the big winners if China moves ahead with a 25% tariff increase on U.S. soybeans.

"Given that crude palm oil (CPO) can be a substitute for soybean oil, we believe Chinese tariffs on American soybeans can be good for the palm oil-producing countries, especially Indonesia and Malaysia as they account for about 84% of global palm oil supply," Affin Hwang Capital said in a note reported by the Chinese newspaper Xinhau.

HIGH-STAKES BATTLE

The Trump Administration is focused on a high-stakes battle, looking ahead to high-tech manufacturing industries in 2025 and beyond. U.S. Trade Representative Robert Lighthizer told senators last month that the administration's approach against China is to target high-tech industries China is developing with a strategy to dominate these markets globally by 2025. Lighthizer pointed to advanced information technology, automated equipment and robotics, aerospace technology, as well as agricultural machinery, biopharma and advanced medical products. China has engaged in unfair practices to steal technology in these industries, the ambassador said.

American farmers continue to be caught in the middle. Nebraska Sen. Ben Sasse, a Republican, held a forum earlier this week with farmers to talk about the impact of the trade fight. USDA Undersecretary for Trade Ted McKinney also attended. Bart Ruth, one of the farmers who attended the event, said farmers overall feel like the fights are walking back years of work to build a market in China.

"It's not a country for old men, because everything I've worked on for 20 years is kind of out of vogue from free trade to global dialogue," Ruth said. "It's a different day."

The trade salvos and aggressive tariff announcements between the U.S. and China ramped up Monday when the Trump Administration announced $50 billion in proposed tariffs on China "as an initial means of elimination of policies and practices" the Trump Administration identified in its trade investigation.

The Trump Administration is using Section 301 of the Trade Act of 1974 to impose penalties against China for "engaging in practices to unfairly obtain America's intellectual property." The administration is seeking to impose tariffs unilaterally rather than bring a World Trade Organization case against China.

"Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers," the White House stated Thursday.

Ruth questioned the logic of the Trump Administration continuing to operate unilaterally in these moves against China. The president's moves are to intentionally go around the WTO. "I think one of Trump's goals is to weaken the WTO to the point it has no standing," Ruth said. "The WTO has its faults. We know people bend the rules, but at least it is an arbitrator in these deals. To throw it out, then everything we have worked for since World War II on global trade is sort of out the window."

More trading partners should be involved to bring a coalition to address intellectual property and technology theft rather than the U.S. trying to battle alone against China, Ruth said.

"The Chinese aren't stupid," Ruth said. "They know exactly where our soft points are. And they don't have to worry about the impact on our consumers like we would be. Even the Chinese have pointed out they think their best hope is the American farmers are going to push hard enough to get this fixed."

CONSIDERING MORE TARIFFS

In a statement Thursday, Lighthizer said he will consider if another $100 billion in tariffs "would be appropriate" and to identify possible products to impose those tariffs on. Lighthizer noted China's retaliation announced Wednesday threatens to impose tariffs on billions of dollars in U.S. exports, including agricultural products.

"Such measures would undoubtedly cause further harm to American workers, farmers and businesses," Lighthizer said. "Under these circumstances, the president is right to ask for additional appropriate action to obtain the elimination of the unfair acts, policies and practices identified in USTR's report."

Responding to negative reaction throughout agriculture and declines in commodity prices, the president added, "I have also instructed the secretary of agriculture, with the support of other members of my cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests," the White House stated.

Despite appearing to take a more aggressive posture against China, the White House said the U.S. is still prepared to talk more about fair and reciprocal trade with China but also protecting technology and intellectual property of U.S. companies.

"Trade barriers must be taken down to enhance economic growth in America and around the world," The White House statement from the president said. "I am committed to enabling American companies and workers to compete on a level playing field around the world, and I will never allow unfair trade practices to undermine American interests."

If the U.S. were to impose additional tariffs, they would be subject to the same kind of public comment period as the proposed tariffs announced April 3, USTR stated.

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

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(ES/BAS)

Chris Clayton