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Farmers get some good news on tariffs

By Judith Kohler • May 21, 2019 at 9:00 AM

In the midst of the U.S.-China tariff battles, there’s good news from the trade front for farmers and ranchers across the country: Japan is lifting long-standing restrictions on the imports of U.S. beef and President Donald Trump is lifting tariffs on aluminum and steel from Mexico and Canada.

Both announcements came late last week as farmers were figuring out how China’s latest batch of retaliatory tariffs will affect them.

Agricultural products are a main target of the tariffs on $60 billion in U.S. goods. China announced the tariffs May 13 after the Trump administration boosted duties on $200 billion of Chinese goods to 25 percent from 10 percent.

“I am pleased to announce that we’ve just reached an agreement with Canada and Mexico, and we will be sending our product into those countries without the imposition of tariffs or major tariffs,” Trump said Friday in announcing the agreement.

Leaders of the three countries struck the deal late last year, but it still has to be ratified by lawmakers of each nation.

“Hopefully, Congress will pass the USMCA quickly,” Trump added, using his preferred acronym for the revised North American Free Trade Agreement (NAFTA). USMCA stands for the United States-Mexico-Canada Agreement.

The announcement came just hours after Trump delayed for up to six months his threat to impose new tariffs on imported autos and auto parts.

Taken together, the two moves seemed intended to deescalate tensions with allies as the administration intensifies its trade fight with China, which is the largest trading partner of the U.S.

“Today’s announcement is a big win for American agriculture and the economy as a whole,” U.S. Secretary of Agriculture Sonny Perdue said Friday after the Section 232 Tariffs were removed from Canada and Mexico. “I thank President Trump for negotiating a great deal and for negotiating the removal of these tariffs. Canada and Mexico are two of our top three trading partners, and it is my expectation that they will immediately pull back their retaliatory tariffs against our agricultural products. Congress should move swiftly to ratify the USMCA so American farmers can begin to benefit from the agreement.”

For months, Trump had resisted advice from lawmakers and administration officials to remove the 25 percent duties on imported metals that he slapped on Canada, Mexico and other countries about a year ago. Trump wanted to keep protecting domestic steelmakers and help factory workers who are among his strongest supporters, and he saw the tariffs as leverage for getting better deals from trading partners.

Approval of the trade agreement will provide farmers and ranchers, already struggling with low commodity prices, a little more certainty, said Dale McCall, president of the Rocky Mountain Farmers Union’s board of directors. “While we see the agreement as making only minor improvements over NAFTA, I guess we’ll take some minor improvements at this time.”

The American Soybean Association (ASA) welcomed the news about the Section 232 steel and aluminum tariffs being lifted, removing a major roadblock to passage of the trade agreement.

“Soybean farmers welcome the Trump Administration’s decision to reach a deal on tariffs with Mexico and Canada. The positive news was uplifting during this time of volatile export markets, and soy growers are urging continuation of the momentum with the swift passage of the USMCA,” said ASA President and Clinton, Ky. soybean grower Davie Stephens. “We appreciate the leadership from Capitol Hill and Members of Congress like Senator Chuck Grassley, for vocalizing the barrier these 232 tariffs presented to passage. As lawmakers turn to completing the task of passing USMCA, we continue to urge them to use their platform to raise the ongoing concerns over the still present China tariffs. ”

Under NAFTA, U.S. soy exports to Canada and Mexico were almost $3 billion in 2017, U.S. soy exports to Mexico have grown four-fold under the agreement, making Mexico the number two export market for U.S. soybeans.

Soy growers depend on exports, and passage of USMCA is vital to ensuring continued trade with two of U.S. soybeans’ top trading partners, ASA officials said.

Meanwhile, Japan has agreed to eliminate the last of the age restrictions on U.S. beef that were first imposed when a case of so-called mad-cow disease was reported in 2003 in Washington state. The fatal brain disease, bovine spongiform encephalopathy, is more prevalent in older cattle. Japan initially banned all U.S. beef and then allowed meat from younger animals.

Last week, on the margins of the G-20 Agriculture Ministerial Meeting in Niigata, Japan, Perdue met with Japanese government officials and affirmed the importance of science-based trade rules. The policy change took effect immediately.

“This is great news for American ranchers and exporters who now have full access to the Japanese market for their high-quality, safe, wholesome and delicious U.S. beef,” Perdue said. “We are hopeful that Japan’s decision will help lead other markets around the world toward science-based policies.”

The U.S. Department of Agriculture estimates that this expanded access could increase U.S. beef and beef product exports to Japan by up to $200 million annually. The agreement is also an important step in normalizing trade with Japan, as Japan further aligns its import requirements with international standards for bovine spongiform encephalopathy.

Beef is Colorado’s No. 1 agricultural export, totaling about $1 billion yearly.

“The lifting of Japanese import restrictions on U.S. beef is fantastic news for Colorado ranchers. Increased access to our leading export market for beef will provide a huge opportunity for the beef industry and further bolster science-based trade standards,” Shawn Martini, the Colorado Farm Bureau’s vice president of advocacy, said in an email.

Still looming for farmers, ranchers and other business people is fallout from the increased tariffs on Chinese goods and the prospect of levies on $300 billion worth of new items. As payback, China is hiking fees on frozen beef from the U.S., said Tom Lipetzky, the Colorado Department of Agriculture’s director of marketing programs.

The Trump administration started imposing tariffs on Chinese goods to stop what it says is ongoing theft of U.S. intellectual property and forced transfers of technology when American companies want to sell their goods in China.

“I know the trade secrets have to be addressed,” McCall said. “But one of the things that I’m still concerned about is I wish we would’ve gone together with our allies against China. I think we would’ve had more leverage.”

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