Washington Insider -- Tuesday

Chinese Tariffs Could Have Significant Effect on Farm Trade

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

Timeline for US Tariffs on Chinese Goods over Intellectual Property

President Donald Trump signed an order to put duties on U.S. imports of Chinese products due to results of an investigation under Section 301 of U.S. trade law on China's actions on intellectual property. The actions include taking the issue to the WTO, investment restrictions and 25% duties on Chinese products. The Office of the U.S. Trade Representative (USTR) will publish with 15 days from March 22 a proposed list of Chinese goods that would be subject to the additional tariffs, though the announced list is expected in the next several days.

The list will be published in the Federal Register with a 30-day comment period. There will also be a public hearing conducted on the proposed tariffs. USTR and the interagency Section 301 Committee will examine and analyze the public comments and those garnered from a public hearing. When that review process is completed, there will be a final determination on the tariff actions and the list will be published in the Federal Register


US-Korea Trade Pact Revisions

The United States and South Korea agreed to revise a trade pact with U.S. automakers winning improved market access, according to statements from South Korea. "We had heated discussions," South Korean Trade Minister Kim Hyun-chong told reporters in Seoul. "The latest agreement removed two uncertainties."

However, it appears that expanded access to the South Korean market for U.S. agricultural products is not part of the final outcome of the trade deal updates. President Donald Trump March 23 said an amended deal between the U.S. and South Korea “is very close to being finished.” Commerce Secretary Wilbur Ross said the U.S. is close to a “pretty comprehensive resolution” with South Korea, hoping to have a "real announcement" on a trade deal this week.


Washington Insider: Chinese Agriculture and Food Tariffs Could Have Significant Effect on Farm Trade

China’s tariff response to proposed U.S. trade sanctions promises to have big impacts on global trade in farm goods – with certain meat, fruit and nuts among the sectors most affected.

The Chinese agriculture ministry has published a list of 128 products that will have additional tariffs applied if the U.S. pushes ahead with actions announced by President Donald Trump on March 22.

While some of these items are of little importance to U.S. exporters, others are worth hundreds of millions of dollars. And for products such as pork, new tariffs will make it harder for the U.S. to compete with key rivals – notably the European Union and Canada – in what is by far the world’s largest market.

If confirmed, China’s retaliatory measures would see tariffs of 15% put on various fruit and nut products, along with wine and modified ethanol.

The tariffs would kick in unless the U.S. and China are able to resolve differences within a "stipulated time."

A second tranche of products would face 25% tariffs after China has “further evaluated the impact of U.S. measures on China.” This second list includes not only pork but also pig offal - a product of huge importance in bilateral trade.

U.S. exports of pig products to China were worth more than $1 billion last year when accounting for both mainland China ($663 million) and Hong Kong ($415 million). Around half of those sales were offal.

With Chinese import demand currently on the wane however, new Chinese tariffs could not come at a worse time for U.S. exporters who have already seen their market share eroded in recent months.

Conversely, the EU and Canada could see big gains if the US-China trade war is not averted. It would also favor China’s domestic pig industry, which has been wrestling with a collapse in prices caused by oversupply.

China’s retaliatory list includes a number of products that the U.S. does not ship to the country in any significant quantity. These include cashew nuts, Brazil nuts and desiccated coconut.

Reduced sales to China would have a significant impact on many other products however, notably almonds, walnuts, pistachios and some types of fruit.

If the trade war escalates, U.S. exporters will be concerned that some even more lucrative products may be hit by Chinese tariffs – above all soy. Given the volume of trade affected, developments in ongoing talks between the U.S. and China over trade issues should be closely watched by producers, Washington Insider believes.


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(CC/BAS)