Farmers for Free Trade Estimates Cost of New Tariffs for Ag Industry

Written By: Gary Quackenbush
Published: June 1, 2018

In response to higher Section 232 import tariffs imposed by the U.S. on steel and aluminum imports from the Peoples Republic of China, on April 2 new retaliatory tariffs averaging up to 15% (25% for pork) went into effect on many American agricultural products imported by China.

These tariff increases on metals have a collateral damage affect on California farm exports since beer comes in aluminum containers and fruits, vegetables, table nuts and some meat products are typically packaged in steel cans.

Twenty-two days later, bipartisan nonprofit Farmers for Free Trade (FFT) published an estimate of the cost of potential additional tariff duties on various U.S. produce based on calculations from the USDA Foreign Agricultural Trade System.

In a letter accompanying the analysis, dated April 24, 2018, former U.S. Senator Max Baucus (D-MT) and former Senator Richard Lugar (R-IN) said, “These tariffs are the opening shot in a trade war. They are also a reminder that, in a trade war, American farmers are the first casualty.”

The letter goes on to say that such tariffs are “A tax on American farmers… With farm incomes already declining for many of these producers, these new tariffs are a drag on the ability of many farmers to make ends meet.”

Saying that the impact of these tariffs on producers is significant, they also observed, “the economies of certain states that depend heavily on specialty crops, nuts and fruit will be hit the hardest.”

Baucus and Lugar pointed out that there is a possibility of more expansive tariffs, based on statements from the Trump Administration, that $50 billion in additional tariffs may be tacked on to Chinese exports, actions these senators say could weaken the competitiveness of American agriculture.

Collectively, California farmers, along with those in Iowa, Washington, Missouri and North Carolina, had $2.6 billion in exports to China in 2017, including exports of almonds, walnuts, pistachios, oranges, grapes, apples, cherries, wine, ginseng and pork.

This product group is now subject to up to 15 and 25% tariff increases imposing $500 million in potential additional duties. California provides farm products in eight of these eleven export categories.

According to information on the FFT’s website landing page, the food that American farmers export and the other agricultural products that they ship to other countries support over 1,000,000 U.S. jobs.  Fully 20% of American farm revenue comes from U.S. Ag exports.

Their message says “American farmers count on a global trading system that drives sales of our world-class products, lowers expenses and provides a reliable way to do business with our key trading partners.”

A breakdown of the anticipated tariff increase impact on single product categories in this collective group is shown below:

On April 12, Brian Kuehl, Executive Director of Farmers for Free Trade, released the following statement after reports that the Administration is crafting a plan to attempt to mitigate the negative impacts of retaliation on farmers from proposed tariffs with a government-run mitigation program. The Administration has not yet released details on who would receive government assistance, how they might qualify, when a program could be put into place, or how long it would last.

Kuehl said, “Farmers need sustained access to our second-largest agriculture export market (China). A mitigation program can’t replace markets that will be lost, and long-term impacts will remain. If farmers must resort to an uncertain, unsustainable government program while our competitors lock in long-term contracts, the damage will be significant and long lasting.

“A government-run mitigation program would be, at best, an ineffective Band-Aid on a major self-inflicted wound. If we want to reverse the damage these tariffs are inflicting on farmers, the solution is simple: reverse the tariffs themselves. We need to move immediately to begin meaningful negotiations with China to end these tariff threats.

The U.S. agriculture industry is the strongest most productive in the world. America exported $129 billion worth products in 2016 has a projected trade surplus of $20 billion in 2017. The nation exports 50% of major commodity crops such as corn, wheat and soybeans; 70% of fruit nuts and 25% of pork.

This was only the first of several reports describing the negative impacts of these new tariffs posted in the “News” section the FFT website (www.farmersforfreetrade.com), and that the organization will be working to “amplify the voices of the many farmers who will be hurt by them.”

The leaders of Farmers for Free Trade encourage you to visit their website and record your opinions related to the recent tariff increases in a video format. These videos will be shared “to engage others and convince our elected officials to maintain and expand export opportunities for agriculture.”

By clinking a button on the website screen you will be guided through the process of how to tell your story.

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