Op-ed: Trade Fracas Will Disproportionately Harm US Ag Exports

"One of our few economic sectors with a positive global balance of trade – agriculture – is being placed at risk as leverage to address other aspects of our trade relationship with China." ( ARA )

By: Daren Coppock, President & CEO of Agricultural Retailers Association 

American agriculture is rightfully concerned over today’s start of an international trade war. Tariffs on Chinese goods announced by the administration have been rapidly countered by China and are focused on U.S. agricultural exports. One of our few economic sectors with a positive global balance of trade – agriculture – is being placed at risk as leverage to address other aspects of our trade relationship with China.

According to data from the Commerce Department as of July 6[1], the United States had a total global trade deficit of over $736 trillion dollars in 2017. To no one’s surprise, China’s share was over $375 trillion in 2017 – virtually half of the total.

If you look only at the trade balance of agriculture and livestock products, the picture is vastly different with China. United States agricultural products have a positive balance of trade globally, to the tune of nearly $17 trillion in 2017. China’s share of that was $15.5 trillion in 2017 – over 90 percent of our positive trade balance in agriculture was attributable to exports to China. Over the last four years over 80 percent of our positive agricultural trade balance is due to trade with China.

We understand the president’s desire to address intellectual and other trade issues with China and other trading partners. We appreciate his resolve in addressing issues which have been overlooked for far too long. There are some serious and longstanding transgressions and unfulfilled commitments that the Office of the U.S. Trade Representative (USTR) has documented[2]. But surely there are more surgical ways to address the issues identified by USTR than the blunt instrument of tariffs.

If the United States loses even a share of its market for agricultural products to China or other export markets, there isn’t a farm bill program large enough to mitigate the short-term damage to farmers and their business partners. Despite noble intentions, the Agriculture Department cannot create a program to immediately restore broken trade relationships and reputations, mitigate the damage to input suppliers and grain merchants who serve farmers, or prevent our export customers from finding or creating new sources of supply. We need to remember the lesson of the Nixon soybean export embargo in June of 1973, which caused our buyers in Japan and Europe to seek new suppliers and led to a dramatic expansion of the soybean industry in Brazil. Trade disruptions have serious and lasting long-term consequences.

The administration has some very talented people in key positions responsible for agricultural trade. It is their desire to expand opportunities for US agriculture. Our hope is that whatever trade disruptions occur during these negotiations will be very short in duration, and that American agriculture – much of which supported Mr. Trump in 2016 and continues to support many of his policy objectives – will not be offered as a sacrifice to achieve gains elsewhere.

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