WASHINGTON, D.C., U.S. — U.S. agriculture groups are fearing the worst after President Trump said he will impose punishing tariffs on imported steel and aluminum.
Speaking at the White House on March 1, the president, in an effort to boost the U.S. steel and aluminum industries, said he had decided to levy tariffs of 25% on foreign-made steel and 10% on aluminum.
“We’ll be imposing tariffs on steel imports and tariffs on aluminum imports, and you’re going to see a lot of good things happen,” Trump said. “You’re going to see expansions of the companies.”
Agriculture historically has been a top target for retaliatory trade actions, and U.S. agricultural groups have warned that this time will be no different. Already, China is eyeing new duties on U.S. sorghum following the Trump administration’s decision in January to impose tariffs on washing machines and solar panels.
But the damage to the U.S. soybean industry, should China retaliate, could be devastating. The American Soybean Association, which was critical of the president’s action in a released statement, noted that China is the top market for U.S. soybeans, purchasing more than all its other customers combined, accounting for $14 billion in sales and more than a third of all U.S. soybean production.
“The tariffs announced today by the administration will put the interests of other domestic industries over farmers,” said John Heisdorffer, president of the ASA and Iowa soy grower. “Prior to today’s announcement, China has indicated that it may retaliate against U.S. soybean imports, which would be devastating to U.S. soy growers. Our competitors in Brazil and Argentina are all too happy to pick up supplying the Chinese market.”
In a joint statement released shortly after the president’s announcement, the U.S. Wheat Associates (USW) and the National Wheat Growers Association (NAWG) said they were “extremely disappointed” in Trump’s decision.
“We have repeatedly warned that the risks of retaliation and the precedent set by such a policy have serious potential consequences for agriculture,” the statement said. “It is dismaying that the voices of farmers and many other industries were ignored in favor of an industry that is already among the most protected in the country.
“Wheat farmers battling a market in which China holds almost 50% of the world ending stocks can sympathize with steel and aluminum workers on the economic effects of Chinse policies leading to global oversupply. However, we hope that our legitimate concerns with this action are taken into consideration in this process.”
Retaliation from China would add significant injury to an already-struggling farm economy in which crop prices have plummeted by 40% in the last several years while farm income is down nearly 50%.
According to Farmers for Free Trade, a bipartisan group, previous trade spats with Canada and Mexico have triggered crippling tariffs on U.S. produce, dairy, pork, wine, beer and cheese.
“These tariffs are very likely to accelerate a tit-for-tat approach on trade, putting U.S. agricultural exports in the crosshairs,” said Brian Kuehl, the group’s executive director. “... Everyone agrees we need to hold our trading partners accountable but taking unilateral action to raise tariffs carries harmful unintended consequences.”
Yesterday’s announcement by Trump is the latest in a series of decisions that have gone against the U.S.’s traditional stance of free trade and globalization. One of the Trump administration’s first actions was to withdraw the United States from the Trans-Pacific Partnership. This agreement, which was a major initiative of the Obama administration, would have created the largest economic bloc in the world by linking America’s economy with those of 11 other Pacific nations.
He also is attempting to renegotiate the North American Free Trade Agreement, which has been worth billions of dollars to U.S. agriculture since it was signed in the mid-1990s.
Investors appeared shaken by the news. The Dow Jones industrial average fell around 586 points, a loss of 2%, in early-afternoon trading before closing the day down 420 points.