China’s Ministry of Commerce announced Aug. 6 that it would suspend all U.S. agricultural purchases in retaliation for President Donald Trump’s threat to impose a new 10 percent tariff on $300 billion of Chinese imports starting Sept. 1. The country also said it would reverse its decision to exempt some soybean importers from tariffs starting Aug. 3.
“This is a serious violation of the meeting between the heads of state of China and the United States,” the Chinese government said in a statement.
In series of Aug. 1 tweets, Trump outlined his plan to impose new tariffs, saying China had not lived up to promises Chinese President Xi Jinping allegedly made during a June meeting in Osaka, Japan, to resume large-scale purchases of U.S. agricultural products.
American Farm Bureau Federation President Zippy Duvall called China’s retaliation “a body blow to thousands of farmers and ranchers who are already struggling to get by.”
China had been the largest or second largest export market for American agriculture every year since 2008, according to the U.S. Department of Agriculture (USDA). U.S. agricultural exports to China declined by more than half in 2018 after trade disputes began.
“Now, we stand to lose all of what was a $9.1 billion market in 2018, which was down sharply from the $19.5 billion U.S. farmers exported to China in 2017,” Duvall said in a statement.
In another move escalating the trade dispute, the U.S. Treasury Department this week labeled China a “currency manipulator,” in response to the People’s Bank of China allowing its currency to severely weaken against the American dollar. The bank blamed Trump’s “unilateralism and trade protectionism and the imposition of increased tariffs on China.”
Attempting to ease concerns of agriculture producers, Trump hinted on Aug. 6 he might provide more aid money for farmers negatively affected by the trade disruption. The administration issued $12 billion in Market Facilitation Program payments (MFP) in 2018 and recently announced another round of $16 in billion in payments to begin in the next few weeks.
“As they have learned in the last two years, our great American farmers know that China will not be able to hurt them in that their president has stood with them and done what no other president would do,” Trump said in a tweet this week. “And I’ll do it again next year if necessary!”
However, farm group leaders gained considerable media attention this week when they expressed their frustrations to Agriculture Secretary Sonny Perdue during a listening session in Minnesota moderated by House Agriculture Committee Chairman Collin Peterson, D-Minn.
“This is causing long-term, devastating damage to not only farmers, but rural communities,” said Gary Wertish, president of the Minnesota Farmers Union, at the session. Although farmers “greatly appreciate” the administration’s aid program, he said “the taxpayer is not going to stand for this.”
Brian Thalmann, president of the Minnesota Corn Growers Association, countered Trump’s recent tweets that farmers are doing “great” again. “We are not starting to do great again,” he said. “We are starting to go down very quickly.”
Perdue said he believes the U.S. will “gain the market back…But it’s got to be a fair, reciprocal and free trade environment, not allowing China to cheat.”
He added: “If your solution is to forget about what China has done and sell and trade with them anyway with cheating, then I just fundamentally disagree with you.”
Meanwhile, South American competitors are ramping up production to meet China’s demand for soybeans. Total U.S. soybean exports in the 2018-19 growing season declined to 46.3 million metric tons from 58.1 million the prior year. At the same time, Brazil and Argentina’s combined soybean exports rose to 86 million metric tons from 78.3 million in earlier years, according to USDA.