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- DTN Headline News
China Responds to New Tariffs
Wednesday, September 19, 2018 8:30AM CDT
By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- 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.

DTN Political Correspondent Jerry Hagstrom contributed to this report.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG)


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