G20 Meeting Leads to (Potential) Pause in US China Trade War

G20 Meeting Leads to (Potential) Pause in US China Trade WarLeaders send mixed messages about tentative agreement on tariffs

Agriculture, Article,  | Quick Take
Dec 4, 2018  | 3 min read | Print Article

President Trump announced a 90-day delay in tariff escalation after a meeting with Chinese President Xi Jinping at the G20 Summit in Argentina.

First, a quick refresher: On September 17, when announcing increased tariffs of 10% on $200 billion of goods coming from China, the President pledged an additional increase to 25% on January 1, 2019 if there was no progress on a better trade deal. The tariffs on $200 billion worth of goods from China is incredibly expansive, covering 5,733 items from salmon to strawberries, affecting the seafood, agriculture, and industrial industries.

Back to the present: President Trump’s statement says he will leave the tariffs on that $200 billion worth of products at the 10% rate for 90 days to begin negotiations on changes to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. In exchange for halting the tariff increase, China has allegedly agreed to purchase agricultural, energy, and industrial products from the United States. We say “allegedly” because the official statement from China never mentioned the 90 day halt on tariffs nor the increased purchase of goods coming from the United States.

Differences in cultural communication? Outright misunderstanding? What we know for certain is throughout the escalation of Trump’s trade war, taxpayers have borne the brunt of the tit-for-tat tariffs. Not just from China, but from Canada, Mexico, Turkey, India, and the European Union. And the tariffs have a cost and farm country is especially paying a price.

The Farm Foundation recently reported that any gains from NAFTA 2.0 are offset by the retaliatory tariffs from Canada and Mexico. They calculate that NAFTA 2.0 will expand U.S. exports by $450 million while retaliatory tariffs by Canada and Mexico due to the U.S. steel and aluminum tariffs cause American agricultural exports to decline by $1.8 billion. In addition, the Farm Bureau calculated that retaliatory tariffs from China have led to a $2 billion net decrease in exports. The USDA projects a reduction of agricultural exports in FY19 by $3 billion due to declined exports to China.  With these losses, the Trump Administration is handing out $12 billion in unbudgeted funds to buy the silence of farmers and ranchers.

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While a 90 day reprieve from additional tariffs is welcome, it will make no difference if the result is to simply shift doomsday into early spring. American agricultural businesses are making their 2019 planting decisions right now. They deserve and need an end to this trade war tariff faux paus. And remember, despite the president signing NAFTA 2.0, there’s no guarantee it goes into effect as both the House and Senate must pass it into law sometime next year. Talk is cheap. Tariffs are expensive. It’s become crystal clear that the Trump Administration needs Congress to reassert its authority over trade and legislate an end to this ill thought out tariff tiff.