Ag sec: Farmers won’t be ‘sacrificial lambs’

Jonathan Oosting
Detroit News Lansing Bureau

East Lansing — President Donald Trump doesn’t intend to let China hold farmers “hostage” in an escalating trade dispute with the United States, Agriculture Secretary Sonny Perdue said Tuesday at Michigan State University.

U.S. Secretary of Agriculture Sonny Purdue

Perdue declined to share details of any pending administration response but acknowledged farmers in Michigan and across the country are anxious after China on Monday slapped a 25 percent tariff on imported pork and a 15 percent tariff on various fruits, including Michigan apples and cherries.

China is retaliating against new steel and aluminum tariffs announced by Trump last month. The president, citing a growing trade deficit, also recently directed officials to impose tariffs on $50 billion worth of Chinese imports in response to long-running allegations the Asian country is stealing trade secrets from U.S. companies.

“I think what the president’s doing on intellectual property theft is the right thing,” Perdue said. “The good thing is that farmers are patriots. They understand that if people aren’t playing by the rules, action has to be taken, but they don’t want to be the only sacrificial lambs in this trade war.”

Later Tuesday, Trump’s trade representative office said it is recommending 25 percent tariffs on $50 billion in Chinese imports to protest Beijing’s alleged theft of American technology. The office released a list targeting 1,300 Chinese products, including industrial robots and telecommunications equipment, but the proposed tariffs couldn’t take effect until a public comment period ends on May 11.

Farmers, warning they are often early targets in international trade disputes, have been bracing for months as the Trump administration began revisiting trade agreements and considering import tariffs. China is one of the largest markets for U.S. agricultural exports.

“As a country, the U.S. sends about a billion dollars worth of pork to China, so that’s a huge potential impact,” said John Kran of the Michigan Farm Bureau.

A prolonged trade dispute could also affect Michigan farmers who grow apples, grapes, peaches, plums and other fruits targeted by the new tariffs. Local farmers could be forced to sell their product in less lucrative markets, and local prices could plummet if the domestic market is saturated.

“Michigan is the No. 3 producer of fresh apples,” Kran said, “and if Washington State — being the largest — doesn’t have the opportunity to send those apples across the Pacific, there’s a good chance they’ll come back into our Midwest and Eastern markets and impact our growers, too.”

China has also threatened — but not yet imposed — tariffs on soybeans, Michigan’s top food export. Farmers here exported $448 million worth of soybeans in 2015.

Gov. Rick Snyder said Monday his administration is urging federal officials address international issues without creating trade wars that could hurt the state.

“The escalation of tariffs across the world is a concern ... and the Chinese tariffs could produce real issues for us” in Michigan, Snyder said.

Purdue told reporters the Trump administration is considering next steps in response to the new Chinese tariffs but said he is “not at liberty” to discuss potential steps.

“In my conversations with the president, he’s not going to let the big agriculturals be a pawn in this issue, and we are convinced that action will be taken here,” Perdue said. “We don’t know exactly what else will be going on, but we’re not going to let farmers be sacrificed on trade wars.”

Trump won the 2016 presidential contest while campaigning on the promise of “fair” trade and balancing trade deficits with countries like China, whose shortfall last year grew 12 percent last year to $566 billion. The administration is renegotiating the North American Free Trade Agreement with Canada and Mexico and initially exempted those two countries from new steel imports as talks continue.

U.S. Rep. Tim Walberg, a Tipton Republican who toured MSU facilities with Perdue as part of the secretary’s Back to Our Roots RV tour, said he thinks Trump’s aggressive approach to trade negotiations is “working thus far.”

Walberg noted the administration secured a new trade deal with South Korea last week and has exempted the European Union from steel and aluminum tariffs as they negotiate with the Unites States.

China is “the big fish,” he said, telling reporters the administration is “in the process of disrupting what has been the status quo for too long and letting China shake us around a bit more than should be allowed.”

Walberg is hoping for a quick resolution to the tariff battle but said he does not think the administration should “blink” as it continues to put pressure on China.

“We know there will be some disruption” for farmers, he said, “but in the end, will it produce a better opportunity? That’s our hope. And that’s why we hope it’s short-term, targeted and effective.”

Perdue was set later Tuesday to visit Clements Food Group’s new pork processing facility in Coldwater. The facility opened in September, and industry leaders say the proximity to a processing plant is helping boost Michigan pork production.

The tariffs are not likely to have an immediate impact on large hog farmers here because many are already locked into contracts, but smaller operations are more susceptible to fluctuations and market shifts, said Mary Kelpinski of the Michigan Pork Producers Association.

Hog farmers are “very concerned” about the long-term impact of the tariffs, Kelpinski said. The Chinese are “huge consumers” of pork, and if prices for U.S. meat rise, they could look to imports from other countries or boost internal production to meet demand, she said.

“We export 26 percent of the pork we produce in this country, so all of our exports markets are really important, and China is interesting because they use a lot of the cuts of pork we don’t use,” Kelpinski said.

Officials from the pork producers group are heading to Washington, D.C., next week to discuss trade issues with Michigan lawmakers and other federal officials. The farm bureau continues to stress the importance of trade in messages to the Trump administration and Congress, Kran said.

The Agricultural Leaders of Michigan, a coalition of pork, soybean and other agribusiness officials, on Tuesday presented Perdue with a letter reiterating their fears over tariff retaliation.

“This potential damage to export markets comes at a very difficult time for the agricultural sector,” they said in the letter. “Michigan agriculture (and U.S. agriculture in general) face uncertainty regarding low prices as we kick off the 2018 production season.

“Trade is a critical piece of the puzzle for a strong, successful agricultural and rural economy. We must maintain and expand, not reduce, our export markets — especially during this deeply uncertain time.”