'Tariff battles are never productive' - US feed grain sector decries trade war with China

By Aerin Einstein-Curtis

- Last updated on GMT

©GettyImages/ pabradyphoto
©GettyImages/ pabradyphoto
The imposition of US tariffs on $50bn in Chinese goods is creating market uncertainty for US feed crop producers as China responds in kind including levies on US feed raw materials.

The Trump Administration said late Monday [June 18] that it also would be seeking to bring 10% tariffs on up to $200bn in goods from China in response to the retaliatory tariffs proposed.

However, those levies would not go into effect until the legal process has been completed, added the office of the US Trade Representative (USTR).

"The initial tariffs that the President asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese,"​ said Robert Lighthizer, US trade representative, in a statement​. "It is very unfortunate that instead of eliminating these unfair trading practices China said that it intends to impose unjustified tariffs targeting US workers, farmers, ranchers, and businesses.  At the President’s direction, USTR is preparing the proposed tariffs to offset China’s action.”

US soybean producers denounced the trade war.

China is the largest importer of US soybeans, said Davie Stephens, vice president of the American Soybean Association (ASA).

“Nobody is a winner today."

“In the midst of a down farm economy and down farm prices, this uncertainty has led to a drop of market prices,” ​he said. “Adding additional export market uncertainty through an expected 25% retaliatory tariff on US soybeans into China ensures that soy growers and the rural communities that depend on them will see the effects of this for years to come – China is a vital and robust market we cannot afford to lose.”

The ASA has been asking the administration to find another way to address concerns with China. It has been estimated that the imposition of retaliatory tariffs by China could lead to a drop of up to 65% in US soybean exports to that Asian behemoth.

The US sold about $14bn worth of soybeans to China last year – or almost one row of every three grown, said the ASA.

Members of the US Soybean Export Council have been working to “minimize”​ the effects of new tariffs brought against soybean imports, said Derek Haigwood, chairman with the US Soybean Export Council.

Those efforts also are being supported by the members of the United Soybean Board (USB) added Lewis Bainbridge, chair of that board. 

“The soy checkoff continues to focus on market diversification for US soybeans to improve profit potential for all US soybean farmers."

US-China tariff details

The Trump Administration said​ Friday that it would be imposing a 25% tariffs on a selection of 818 products from China in an effort to address a non-sustainable situation regarding technology and intellectual property starting on July 6. The tax applies to goods that have 'industrially significant technologies'.

An additional set of 284 product lines has been identified and are set to go through additional review before a final selection of items to receive additional duties is made, according to information​ from the Office of the US Trade Representative.

The administration also said that the US will consider additional tariffs if China brought retaliatory measures.

In response to the US decision, China’s Ministry of Commerce (MOFCOM) announced​ that the US has violated China’s rights and interests according to the rules of the World Trade Organization (WTO) and that that the steps taken threaten the country’s security and economic interests.

China is set to institute a 25% tax on products including several agricultural products and feed grains imported from the US starting on July 6. The tariffs would cover about $34bn in goods, said MOFCOM. It also is intending to add an import tariff of 25% on another set of imports amounting $16bn in goods to be specified later.

US feed crop producer reactions

US soybean producers were not the only feed sector members to speak out against the tariffs announcements.

US sorghum producers also spoke about the damage the tariffs could bring, as sorghum was among the grains covered. The announcement of the new tariffs comes shortly after a 178.6 duty on sorghum was halted, said the National Sorghum Producers (NSP).

“National Sorghum Producers, alongside our producers, stakeholders and partners, have already seen the market uncertainty and price fluctuations that occur when China retaliates on US goods,”​ said Don Bloss, NSP chairman. “We understand the grave impact tariff decisions can inflict on producers. American farmers depend on trade with China, and these tariffs will have devastating effects on US agriculture.”

The US Grains Council added that its members have had to deal with “tariffs, counter-tariffs and policy restrictions” ​before. Although China remains an important market for feed grains and co-products, the council also is focusing efforts on expanding markets in other parts of the world.

“We are concerned any tariff opens this market to our competitors and locking out US products doesn’t mean trade stops – it means other partners will take our place,”​ said Tom Sleight, president and CEO with the US Grains Council. “Bottom line: tariff battles are never productive.”

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