U.S. agriculture would be a target in a new trade war with China, said a private consultant speaking on a think tank panel on Monday, pointing to former president Donald Trump’s support for higher tariffs and calls in the House for a reset of Sino-U.S. trade relations. But Trump’s former ag negotiator said tariffs were “the only tool in the tool box” and Trump was right to use them in the past.
Months ago, Trump suggested a 10% tariff on all imported products. Now, he’s discussed with advisers the imposition of a 60% tariff on Chinese goods, reported the Washington Post. Either of the approaches could ignite a trade war, analysts told the newspaper.
Food and ag exports fell by 6% during the Sino-U.S. trade war started by Trump in 2018. The administration paid farmers $23 billion, drawn from USDA reserves, as compensation for lost sales and income. The two nations called a truce in early 2020.
“I do think there is a real risk that the kinds of things being talked about by the Trump campaign and even in the House Select Committee on China report could really be of danger to American agriculture,” said Sharon Bomer-Lauritsen when asked if U.S. agriculture could afford another trade war. Bomer-Lauritsen, a former U.S. trade official, founded consultancy AgTrade Strategies in 2020. The select committee called last month for a tougher strategy toward China and said the country should be prepared for Chinese retaliation against U.S. agriculture.
The United States is obliged to hold other nations to account for unfair trade behavior that hurts its citizens, said Gregg Doud, chief agricultural trade negotiator during the Trump years, during a panel discussion at the American Enterprise Institute. Doud is now president of the National Milk Producers Federation.
“The problem with tariffs is it’s the only tool in the toolbox to address a lot of the fundamental macro-economic problems,” he said. “Part of the verbiage, and you know, it’s used to create leverage. But at the end of the day, you have to have somebody who wants to go to bat for this country and make changes. And President Trump did that.”
“At what cost to companies and farmers and businesses? Totally disrupted people’s lives,” responded Bomer-Lauritsen.
Food and ag exports generate 20 cents of each $1 in farm income but evoke less ardor than a few years ago. Last March, only one-third of farmers polled by Purdue University said they expected exports to increase over the next five years, down from 72% in 2020. “Producers’ confidence in U.S. agriculture’s exporting prowess has weakened considerably,” said Purdue.
“I don’t think that it’s too far from wrong to say that the dynamic has shifted,” said Craig Thorn, a partner in DTB Associates, an agricultural trade consultancy. The flood of trade war and pandemic relief payments, coupled with the withering of trade negotiations, has encouraged farm groups to focus on Washington. “If the spigot is on full blast…it’s your job to put a bucket under it and get as much as you can. And if there are no trade negotiations going on, you’re not going to pay a lot of attention to the possibility of making more money from the world market.”
One example of the shift in mood, said Darci Vetter, who was chief agricultural negotiator during the Obama era, is the lack of Capitol Hill discussion of trade rules as an element of farm bill negotiations. In the recent past, farm-state lawmakers knew the intricacies of world trade rules and consulted often with administration officials to ensure they would not violate ag trade agreements unwittingly while trying to maximize the farm safety net.
Among his first actions as president, Trump withdrew the United States from the Trans-Pacific Partnership, a free-trade agreement negotiated by Obama officials. Trump preferred bilateral negotiations and weakened the ability of the WTO to referee trade disputes. His major trade accomplishment was passage of the U.S.-Canada-Mexico Agreement.
To watch a video of the AEI panel discussion, click here.