Trade and China

June 21, 2018

Hello everybody out there in farm country. This radio commentary is brought to you by the National Corn Growers Association, CropLife America, and Renewable Fuels Association. They are all friends, supporters, and allies of healthy farm economy and prosperous rural America. Thank you.

And now for today’s commentary -

I am headed to China this week with 30 farm broadcasters and farm and ranch leaders. We will talk to Ambassador Terry Branstad and other U.S. representatives in our Embassy and spend time with Chinese government leaders. Given the level of trade war attacks that are in place, we will be right in the middle of a very dangerous dispute.

Keep in mind how important China is to our ag economy. They are our number two export market, spending $20 billion on our products. That is 14% of what we sell. Our sales to China have been coming down from a very high level of $26 billion in 2012. One reason for the decline – our prices have been falling.

Last Friday, President Trump announced he planned to hit China with $50 billion of tariffs on high tech goods. On Monday, he just announced another $200 billion in tariffs. China says they will retaliate with tariffs on our ag goods to become effective on July 6. China has been a huge market for our soybeans and Distiller’s dried grains with solubles (DDGs). A 25% tax on our soybeans will really hurt.

There is not very much time left before all of these tariffs will be imposed. The worry in the country is “off the charts.” As the trade dispute noise has grown louder, the grain markets have tanked. Meat markets have paid a price also. U.S. Department of Agriculture Deputy Secretary Steve Censky said to AgriPulse: “We’re hoping that China will come to the table and engage.”

Well, our ag team will be in China at this very dangerous and historic time. Stay tuned. With all the China storm, we don’t need another trade war, but we have one. Our dispute with Canada and Mexico over the North American Free Trade Agreement is far from settled.

USDA Secretary Sonny Perdue said: “I think U.S. Trade Representative Robert Lighthizer believes that we could get a bilateral deal done more quickly with Mexico, and then with Canada, and possibly come back together with all three nations, and hopefully we can get that done sooner rather than later.”

That sounds like wishful thinking to me. Canada’s dairy supply management program is a huge distortion to our own dairy industry.

Maybe our farm team can fix everything while in China – then we can go to Canada. You know, I’m kidding.

If you would like to review my radio shows going back more than 20 years, just go online to http://www.johnblockreports.com

Next week, Rick Frank will deliver the commentary. I am John Block headed for China.