Tag Archives: Tariff

OMAHA  — In the latest round of tariffs, China responded Tuesday to the U.S. by announcing new 5% to 10% tariffs on $60 billion in U.S. goods after President Donald Trump late Monday announced similar tariffs on roughly $200 billion in goods from China effective Sept. 24.

China did not provide a list of specific products, but stated its tariffs would affect 5,207 lines of products from the U.S. China has already implemented multiple tariffs of 25% or higher on a range of U.S. commodity products, including soybeans, the largest U.S. export to China in 2017, valued at roughly $14 billion. Those earlier tariffs have effectively shut down exports of several major agricultural products to China.

President Trump took to Twitter on Tuesday morning, saying China’s efforts were directed at his supporters and to influence the outcome of the midterm elections.

“China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me. What China does not understand is that these people are great patriots and fully understand that…..” Trump tweeted.

The president added, “…..China has been taking advantage of the United States on Trade for many years. They also know that I am the one that knows how to stop it. There will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!”

The Chinese Ministry of Commerce said the purpose of its retaliatory tariffs “is to curb the escalation of trade frictions. It is a forced response to U.S. unilateralism and trade protectionism. China hopes the U.S. side will stop trade frictions.” Chinese officials added that dialogue could produce a “win-win” and safeguard free trade.

In a statement Monday, President Trump announced 10% tariffs on $200 billion in products from China starting Sept. 24 with tariffs boosted to 25% on those products starting Jan. 1. The president stated, “Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”

The tariff escalation comes as farmers are in the middle of fall harvest and looking for ways to store bumper crops of corn and soybeans while prices continue to deteriorate with waning exports. DTN’s National Corn Index on Tuesday stood at just under $3.05 a bushel, while the National Soybean Index was priced at just under $7.22 a bushel.

Sept. 1 reset the export marketing year at USDA for most crops. A year ago, China had already had outstanding sales of 6.5 million metric tons of U.S. soybeans, but as of now, new sales for the marketing year stand at 1.39 million metric tons.

Meanwhile, a coalition announced last week that “Tariffs Hurt the Heartland,” a campaign that grew out of “Farmers for Free Trade” and the National Retail Federation, is holding its first town-hall event Tuesday in Chicago. Other events are planned later this month in Nashville, Pennsylvania and Ohio to oppose the Trump administration’s tariff policies. More than 80 groups from an array of industries are tied to the initiative.

“Tariffs are taxes, plain and simple,” said Jonathan Gold, a spokesman for Tariffs Hurt the Heartland and a vice president at the National Retail Federation. “By choosing to unilaterally raise taxes on Americans, the cost of running a farm, factory or business will grow.

Gold added, “In many cases, these costs will be passed on to American families. Tariffs have already resulted in layoffs, and this escalation will continue to squeeze American businesses with higher input costs and American farmers with decreasing commodity values.”

Several other U.S. business groups criticized the Trump administration’s move Monday.

“Today’s decision makes clear that the administration did not heed the numerous warnings from American consumers and businesses about rising costs and lost jobs on Main Street, in factories, and on farms and ranches across the country,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.

Trump reiterated his administration’s actions come after the U.S. Trade Representative “concluded that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property — such as forcing United States companies to transfer technology to Chinese counterparts. These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy.”

The president said China has been unwilling to change its practices, which sparked the first round of 25% tariffs on $50 billion in Chinese imports that the U.S. imposed earlier this summer.

“As president, it is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country itself,” Trump stated. “My Administration will not remain idle when those interests are under attack.”

Trump then added he hopes the trade situation would be resolved, “by myself and President Xi of China, for whom I have great respect and affection.”

In anticipation of Monday’s announcement, Trump tweeted early Monday, “Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!'”

White House adviser Larry Kudlow said on CNBC Monday that Trump has not been satisfied by recent talks with China. Kudlow also alluded to the confidence in the overall U.S. economy right now.

“The big story here is the change in policies and the economic boom,” Kudlow said.

Still, the tariff battle has translated into $4.7 billion in direct aid payments to farmers this fall because of lost exports, especially for commodities such as soybeans, pork and sorghum. USDA has created three separate programs to help farmers and agricultural exporters. The White House authorized USDA to provide up to $12 billion in aid programs for farmers.

The U.S. Trade Representative’s Office stated the list of Chinese products includes 5,745 lines of products. The U.S. dropped proposed tariffs on some consumer electronics products such as smart watches and Bluetooth devices. Other products the U.S. dropped from the list included certain chemical inputs for manufactured goods, textiles and agriculture; certain health and safety products such as bicycle helmets, and child safety furniture such as car seats and playpens.

However, the list released by USTR still included putting 10% tariffs on an array of seafood products, poultry products, vegetables, fruits and nuts from China, as well as a long list of industrial chemicals.

China’s exports of U.S. soybeans are expected to plummet over the next marketing year, according to the latest forecast.

A soybean crushing industry executive told Reuters this week that China will almost entirely replace its soybean imports from the United States with Brazilian beans and other origins in the upcoming season.

The latest forecast from China predicts Imports from the United States will plunge to just 700,000 metric tons, down from 27.8 million metric tons in the most recent marketing year.

The drop in imports of U.S. soy by China stems from the tit-for-tat trade war between the U.S. and China. In July, China imposed a 25 percent tariff on U.S. soybeans, sending purchases lower. The U.S. and China met last month in Washington, DC, but no formal talks are expected to take place soon, prolonging the trade war.

Ports and ground terminals in nearly every state handle goods that are now or will likely soon be covered by import tariffs. Port executives worry that this could mean a slowdown in shipping that would have ripple effects on truckers and others whose jobs depend on trade.

The Associated Press analyzed government data and found that from the West Coast to the Great Lakes and the Gulf of Mexico, at least 10 percent of imports at many ports could face new tariffs if President Donald Trump’s proposals take full effect.

Since March, the U.S. has applied new tariffs of up to 25 percent on nearly $85 billion worth of steel and aluminum and various Chinese products, mostly goods used in manufacturing.

Trump said in a recent tweet, “Tariffs are working big time.” He has argued that the tariffs will help protect American workers and force U.S. trading partners to change rules that the president insists are unfair to the United States.

In New Orleans, port officials say a tariff-related drop in shipments is real, not merely a forecast. Steel imports there have declined more than 25 percent from a year ago, according to the port’s chief commercial officer, Robert Landry.

The port is scouting for other commodities it can import. But expectations appear to be low.

“In our business, steel is the ideal commodity,” Landry said. “It’s big, it’s heavy, we charge by the ton so it pays well. You never find anything that pays as well as steel does.”

The port of Milwaukee imports steel from Europe and ships out agricultural products from the Midwest. Steel imports haven’t dropped yet because they are under long-term contracts, said the port director, Adam Schlicht. But there has been “an almost immediate halt” in outbound shipments of corn because of retaliatory duties imposed by the European Union on American products.

Much of the corn, he said, “is just staying in silos. They are filled to the brim.”

Most other ports have been humming along and even enjoyed an unexpected bump in imports during June and July as U.S. businesses moved up orders to ship before the new tariffs took effect. That started with manufacturing goods and is now spreading to retail items for back-to-school and Christmas.

“Some of my retail customers are forward-shipping the best they can to offset proposed tariffs,” says Peter Schneider, executive vice president of T.G.S. Transportation, a trucking company in Fresno, California.

Port officials were encouraged by this week’s announcement that the United States and Mexico had reached a preliminary agreement to replace the North American Free Trade Agreement, hoping it might lead to reduced trade barriers. Canada’s participation in any new deal to replace NAFTA, though, remains a major question mark.

The port officials continue to worry, though, that Trump will make good on a plan to expand tariffs to an additional $200 billion in Chinese imports — a list that includes fish and other foods, furniture, carpets, tires, rain jackets and hundreds of additional items. Tariffs would make those items costlier in the United States. And if Americans buy fewer of those goods, it would likely lead to fewer container ships steaming into U.S. ports.

The impact will be felt keenly at West Coast ports like Los Angeles and Long Beach.

Los Angeles Mayor Eric Garcetti, relying on information from his port officials, said his port — the biggest in the United States — could suffer a 20 percent drop in volume if the additional $200 billion in tariffs are imposed against Chinese goods.

Jock O’Connell, an economist in California who studies trade, said he doubts a downturn would be so severe — that would match the slump that accompanied the global recession of 2008 — “but we will see a definite impact.”

Here are some of the key findings from the AP analysis:

— U.S. tariffs will cover goods that are imported at more than 250 seaports, airports and ground terminals in 48 states.

— At 18 of 43 customs districts — including those representing ports around Los Angeles, San Francisco, New Orleans and Houston — at least 10 percent of their total import value could be covered by new tariffs if all Trump’s proposals take effect.

— Retaliatory duties by China and other countries cover $27 billion in U.S. exports.

Eugene Seroka, executive director of the Los Angeles port, worries that “if tariffs make it too expensive to import, there will be an impact on jobs.”

Seroka and others don’t expect layoffs on the docks. Union longshoremen — whose average pay last year on the West Coast was $163,000, according to the Pacific Maritime Association, which negotiates for the ports — often have contract provisions ensuring that they are paid even if there’s no work. And there are fewer of them than there were a few decades ago because the advent of shipping containers has reduced the need for people on the docks.

Dwayne Boudreaux, an International Longshoremen’s Association official in Louisiana, said, though, that his stevedores are handling about 10 percent less steel from Japan because of the new tariffs.

“We don’t think it’s going to (get) worse,” he said. But, he added, “who knows — that could change from the next press conference.”

The impact might be greater on truck drivers and warehouse workers. Fewer will be needed, according to O’Connell.

Many drivers who deliver shipping containers from the dock to warehouses are independents contracted by trucking companies, and they don’t get paid if there is nothing to haul. Some might leave the profession, said Weston LaBar, CEO of the Harbor Trucking Association in Long Beach, California.

“It’s hard to retain drivers,” he said. “If we don’t have work for those drivers, we’re worried they will leave for some other segment of the trucking business or go into another business, like construction.”

Less shipping means less revenue for the ports — something that could limit their ability to pay for expansion and improvement projects, according to Kurt Nagle, president of the American Association of Port Authorities. He said U.S. ports are in the midst of a planned $155 billion in infrastructure spending from 2016 through 2020.

The current trade war was foreshadowed in January by steep U.S. tariffs on imported solar panels and washing machines. It exploded with the U.S. tariffs of 25 percent on imported steel and 10 percent on aluminum. Then came two rounds of duties targeting about $50 billion in imports from China — punishment against that country for pressuring U.S. companies to transfer technology and intellectual property to Chinese companies.

Along the way, China, the European Union, Turkey, Canada and Mexico imposed retaliatory duties on U.S. goods including farm products and Harley-Davidson motorcycles.

This week, the U.S. Trade Representative’s office finished six days of hearings on a plan to hit another $200 billion in Chinese imports with 10 percent duties. Trump has said that if China continues to retaliate he could eventually add tariffs on $450 billion in Chinese goods, nearly 90 percent of that country’s 2017 exports to the U.S.

Trade wars are usually temporary. President George W. Bush abandoned his steel tariffs after less than two years.

Milwaukee’s port director worries, however, that damage from the current trade dispute could linger. Canada is increasing corn exports to Europe, and Brazil is trying to pick up the slack in soybean exports to China.

“Others are already picking up that business,” Schlicht said.

USDA’s trade aid package is a disappointment to corn farmers, according to Kansas Corn Growers Association President Ken McCauley, White Cloud. McCauley commented on the one-cent-per-bushel allocation for corn in the Market Facilitation Program announced by USDA today.
“I can’t say ‘thanks for nothing’ but one cent per bushel is close to nothing, In fact, this payment only applies to half of your crop so in reality, that’s a half-cent per bushel at this point. A half-cent is no relief from the market destruction we’ve seen for corn.”
Earlier this summer, Kansas Corn leaders told EPA they were “mad as hell” about the more than 2 billion gallons of ethanol waivers handed out to oil refiners, while the agency continutes to drag its feet on allowing year-round market access for E15 fuel.
“As a corn farmer, I’m starting to feel picked on by the administration. We’ve had to fight EPA on ethanol waivers and are seeing no movement in allowing year-round E15 sales,” McCauley said. “Now, even though National Corn Growers showed USDA that corn farmers have seen a 44-cent-per-bushel loss due to trade issues, we’re getting a half a penny.”
When the creation of USDA’s Market Facilitation Program was first announced, NCGA commissioned an economic impact analysis from the tariffs on corn farmers and program options for the Market Facilitation Program by Dr. Gary Schnitkey at the University of Illinois. The comprehensive analysis showed a loss of 44 cents per bushel to corn farmers. NCGA shared this analysis with USDA and OMB officials and has aggressively advocated for corn farmers to help the federal officials understand the economic impact to corn prices.
“Corn growers have been proactively working with the administration in many areas, but so far, we have ended up on the short end of the stick,” McCauley said. “It’s time that corn growers got a win. If the administration would follow up on its promise to allow year-round market access for E15 fuel, that would help corn demand. We simply need market access, for ethanol and for exports.”
What little aid is offered to corn will be based on 2018 production, slighting those growers who have been hurt by export market loss plus crop loss due to weather.
“Those folks are suffering a double-whammy of low crop production, and lower crop prices due to trade disruption. KCGA CEO Greg Krissek said. “But regardless of where you grow corn, or what kind of crop you produced, the one-cent-bushel payment on half your crop doesn’t provide relief.”
Although Kansas Corn is disappointed in the rate for corn in the program, one positive is the creation of a Agricultural Trade Program which offers $200 million for overseas market development.
“This will really bolster our efforts to build foreign markets and is needed,” McCauley said. “Groups like U.S. Grains Council and U.S. Meat Export Federation are poised to seek out those replacement markets that are needed by agricultural producers. We’d rather have markets than government relief, but we got neither.”

The trade war between China and the U.S. seems primed to worsen as the governments failed to make progress in two days of discussions. Reuters says the two sides met last week with low expectations of progress and there are no further talks scheduled at this time.

A source close to the negotiations told Reuters that Chinese officials have raised the possibility of no further talks until after the U.S. elections in November. The lack of progress adds to uncertainty for businesses who now have to weigh the risks when considering investments in the U.S. or China. A new round of tariffs could take effect as soon as early September. There’s no guarantee they’ll be the last tariffs or that there won’t be other measures taken as well.

The two countries engaged in talks for the first time since last June. U.S. officials were due to meet with delegations from the European Union and Japan to discuss joint efforts to confront China at the World Trade Organization over its industrial subsidies and conduct of its state-owned enterprises.