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Farmers are seeing cancelled contracts at a time of already low prices.
WASHINGTON — Farmers from states most vulnerable in President Trump’s escalating trade wars questioned the logic behind continuing tariffs on major export markets Mexico and Canada.
Testifying before a full House Ways and Means trade subcommittee Wednesday afternoon in D.C., agriculture stakeholders pointed out multiple times that net farm income has dropped 52 percent over the last five years.
The farmers said they fear a “perfect storm,” where lower income combines with trade threats, a labor shortage and gridlock over a new Farm Bill to do irreparable harm to their industry.
“We are concerned with the blowback from the administration’s decision to place tariffs on our trading partners,” said Russell Boening, Texas Farm Bureau president. “Agriculture is bearing the brunt of retaliation at a time when farmers are already facing low commodity prices, some high input costs and, of course, unpredictable weather.”
While Boening commended Trump for confronting decades of trade abuse, in particular with China, he called tariffs imposed on Canada and Mexico “concerning” and worried they’d nullify any benefits farmers will see from last year’s Republican tax bill.
A report from Moody’s Investors Service on Thursday predicted the responses from China and Mexico will be a hit to the agricultural sector. Retaliatory tariffs by China and Mexico will exacerbate already low crop prices and reduce agricultural land value—thereby reducing the property tax revenue of rural local governments, the report found.
U.S. Rep Dave Reichert, a Washington Republican and subcommittee chair, said he has pressed both Trump and Commerce Secretary Wilbur Ross to restore steel and aluminum tariff exemptions for “two of America’s most important allies”: Canada and Mexico.
The European Union, Turkey, Russia and India have also been dragged into Trump’s trade war with farmers becoming “collateral damage,” Reichert said, calling that damage “entirely predictable.”
“In trade wars, agriculture has been and continues to be the tip of the spear,” said Kevin Paap, Minnesota Farm Bureau president. “All commodities are being impacted.”
Soybean and pig farmers are feeling the hurt most in Minnesota, Paap said, noting that Mexico, Canada and China accounted for 43 percent of the state’s exports in 2017. China cancelled $140 million in soybean contracts at end of June, according to the U.S. Department of Agriculture.
Paap worried trade partners may cut other deals the longer things go.
When the first wave of Trump tariffs on steel and aluminum landed on March 8, Michelle Erickson-Jones saw the price of a steel grain bin she was attempting to purchase jump 8 percent. The Montana Grain Growers Association president had to abandon her grain storage expansion project.
“These scenarios are playing out across the nation, particularly in the states that depend on agriculture,” Erickson-Jones said.
All present agreed China’s predatory trade practices—including suppressing the value of their currency, dumping steel onto world markets and intellectual property theft—need to be rebuffed.
“Get the Mexico and Canada deals done,” said Scott VanderWal, South Dakota Farm Bureau president. “Then move on to China”
Jared Bernstein, senior fellow at the liberal-leaning Center on Budget and Policy Priorities, took things a step further arguing “substantive pushback” against Trump’s trade policy is needed from Congress.
About 2 million jobs across 40 industries, including 400,000 farm jobs, are exposed in the current trade war with China, according to the Brookings Institution. Tariffs won’t improve their economic opportunity in an era of globalization, Bernstein said.
“I urge Congress—and especially the Republican majority, as they hold the legislative cards—to claim back its constitutional role to set tariffs,” Bernstein said. “I recognize that there are some efforts afoot to do so, but they have been demonstrably toothless and ineffective thus far.”
U.S. Rep. Bill Pascrell, a New Jersey Democrat, criticized committee Republicans for not calling a White House witness to testify at the hearing.
Reichert countered they’d done so previously and would in future hearings.
“Commerce Secretary Wilbur Ross should be here listening to our witnesses as well and be held accountable for this administration’s irrational actions,” Pascrell said.
Dave Nyczepir is a News Editor at Government Executive’s Route Fifty and is based in Washington, D.C.