I write this column as President Donald J. Trump celebrates his first 100 days in office, and those in agriculture are worried about how bad tariffs will hurt.
I think the president needs to do something about the foreign trade imbalance.
American agriculture has always taken a hit when it comes to the unfair ways other countries treat us.
The bad part for ag is, during a trade war and retaliatory actions, other countries find markets outside of the U.S. for their grains, meats and farm machinery.
Countries in South America and India and South Korea produce the same ag products as the U.S., which China is especially looking for.
Basically, a lot of the world has caught up with the U.S. and many are manufacturing products in their countries.
The hurt is already showing up as China imposes retaliatory duties on U.S. pork and pork and beef variety products in response to increased tariffs.
Erin Borror, U.S. Meat Federation (USMEF) vice president of economic analysis, says, “While USMEF is always working to expand and diversify export markets, China has unique product needs which other destinations cannot fully replace.”
Borror continues, “There’s a mad scramble to try to essentially find new homes for this product which is in the pipeline and was produced for China. Remember, for China, we have special labeling. It’s ractopamine-free product with a China label, both on the bag and the box, so it’s costly and production specific for China, and thus, difficult to reroute or find a new home for.”
Borror estimates, “China being absent from the market puts more than $150 per fed steer or heifer at risk. The U.S. pork industry stands to lose about eight dollars to $10 per head in export value, in large part because China is the leading destination for pork variety meats. Without the Chinese bid, we’re looking at a $1 billion loss over the year, and there would be about a $4 billion loss on the beef side.”
Borror goes on to say, “For pork, again, China is the number three market. For variety meats, China is still our dominate customer. They are by far the largest buyer of pork feet, head items, stomachs and intestines, and they are taking tremendous volume at higher prices than any other customers can pay.”
Another issue is China may not renew registrations for some 400 U.S. beef facilities which would be an additional barrier for U.S. exports. The majority of U.S. beef production is currently ineligible for China, regardless of the applicable tariff rate.
While registrations for most U.S. pork facilities were renewed in March, China has not renewed nine establishment registrations which expired on April 20.
The good news is U.S. and China rhetoric has died down some with active negotiations. China plans to exempt some U.S. imports from its 125 percent tariffs and is asking firms to identify critical goods they need duty-free.
Usually, on average, trade negotiations are inherently complex and time consuming.
Research has shown it normally takes an average of 18 months to negotiate a major trade deal, and full implementation of a trade agreement typically takes an additional 45 months after the deal is signed.
Keep being optimistic, some countries are making deals already.
Dennis Sun is the publisher of the Wyoming Livestock Roundup, a weekly agriculture newspaper available online and in print.
