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By Casey Wooten
President Donald Trump’s campaign rhetoric on trade tariffs with China and Mexico may not have been directed at agriculture, but U.S. farmers could get caught in the fracas anyway.
Trump’s aggressive posturing on U.S. trade—threatening as much as a 45 percent tariff on Chinese imports and 20 percent for Mexican goods—has some in the agriculture sector worried about retaliation against one of the bright spots of U.S. exports.
“Because it’s such a positive trade balance, you would think it would be a likely target in any sort of retaliation,” Joe Glauber, senior research fellow at the International Food Policy Research Institute, told Bloomberg BNA.
Indeed, Mexico and China are in the top three agricultural export destinations for the U.S., amounting to 28 percent of all U.S. agricultural exports, or some $37.7 billion in trade in 2015, according to USDA data.
Since his Jan. 20 inauguration, Trump has been largely silent on any potential trade issues with China, but he spent much of his campaign railing against America’s negative trade balance with the country.
Much of that imbalance has been in manufacturing, however. U.S. agriculture exports to China have more than doubled over the past decade, climbing from $6.7 billion in 2006 to $20.2 billion in 2015, according to the Agriculture Department.
Chinese officials have already sent a shot across the bow, when a state-run newspaper warned in mid-January that U.S. agriculture exports could face retaliatory action if Trump imposed a tariff on Chinese goods.
Retaliation from China could hit major commodity crops like soybeans, coarse grains and cotton. About 25 percent of all U.S. soybean production finds its way to Chinese ports, about $10.5 billion worth in 2015. Those crops are largely used in animal feed as China’s growing middle class demands more meat in their diet. Those exports have helped soften the years-long drop in soybean prices, driven by record yields worldwide.
But China could find those soybeans elsewhere, Glauber said.
“Brazil, Ukraine, Argentina or any number of South American countries would be more than happy to take advantage of a loss, or at least a large tariff surcharge, on U.S. exports to China,” Glauber said.
Agricultural exports to North American Free Trade Agreement countries Canada and Mexico have climbed considerably in the past decade as well. Exports to Canada registered $20.9 billion in 2015, with $17.7 billion worth of exports going to Mexico in the same year, the USDA said.
But Trump’s rhetoric has largely focused on America’s neighbor to the south.
Trump said in a Jan. 27 tweet that Mexico had “taken advantage of the U.S. for long enough” by not addressing issues ranging from trade to border security. That came just a day after Mexican President Enrique Pena Nieto canceled a trip to Washington after Trump pledged to follow through on his campaign promise to build a wall on the U.S.-Mexico border, possibly financed by a 20 percent tax on Mexican imports.
“That sounds like protectionism to me,” Gordon Stoner, president of the National Association of Wheat Growers, told Bloomberg BNA. “It would likely greatly reduce imports, and as a consequence I fear there would be retaliation.”
The diplomatic row highlighted the sour relationship between the Trump administration and Mexican officials, which could jeopardize major U.S. exports of dairy, wheat, pork and other agricultural products.
The U.S. exports about 50 percent of its wheat, and Mexico accounts for one of the largest individual markets, $650 million in the 2015-2016 marketing year, according to the USDA.
In 2015, the U.S. exported to Mexico about $1.3 billion worth of dairy products and the same value in pork.
To contact the reporter on this story: Casey Wooten in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com
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