Montana farmers, ranchers brace for retaliatory Chinese tariffs

Montana beef producers fear the impact of a threatened Chinese tariff on U.S. ag imports. (Missoula Current file photo)

Montana farmers and cattle ranchers have mixed emotions this year as Independence Day approaches.

That’s because July 6 is the date when the Chinese government has vowed to begin collecting a 25 percent additional tariff on agricultural imports from the U.S. — including beef, wheat and other products from Montana.

The Chinese market reopened to Montana ranchers last year, after being closed since 2004 because of food safety concerns.

Now that market is in jeopardy, but according to Agriculture Secretary Sonny Perdue, any financial burdens will be compensated for by the U.S. government — although he did not say how this week.

China is the largest agricultural export market for the United States, with more than $21 billion in U.S. agricultural exports in 2016, up from $20 billion in 2015, according to the Foreign Agriculture Service.

Perdue said Monday that China needs to just play by the rules set out in the 2001 World Trade Organization agreement.

“There is no denying that the disruption in trade relations with China is unsettling to many in agriculture, but if the president succeeds in changing China’s behavior, America’s farmers will reap the benefits,” Perdue said. “We have tools at our disposal to support farmers faced with losses that might occur due to downturns in commodities markets. We have not unveiled our strategy, as it is not good practice to open our playbook while the opposing team is watching.”

In an interview with Missoula Current, U.S. Sen. Jon Tester, D-Montana, said he questioned Perdue earlier this spring on the administration’s trade policy and how it affected Montana producers.

Tester said he emphasized to Perdue that the “pain retaliatory tariffs will have on Montana ag producers” is significant.

“This escalating trade war is threatening Montana farmers and ranchers by creating uncertainty and limiting our markets, which costs them money,” Tester said. “The administration needs to figure this out quickly, because when ag producers lose access to markets, it can take a generation to get those customers back.”

Farmers for Free Trade co-chair Max Baucus, a former U.S. senator from Montana and ambassador to China, said the retaliatory Chinese tariffs on agriculture products could become very real, very soon.

“This is a tax on American farmers, brought about by protectionist trade policies,” Baucus said in a statement. “American farmers appear to be the first casualties of an escalating trade war. With farm incomes already declining, farmers rely on export markets to stay above water.

“This could be the calm before the storm. While $3 billion in retaliatory tariffs is a major hit, the retaliation expected on agriculture … could be broader and deeper. Now is the time to de-escalate both the trade rhetoric and actions that have brought us to a point where American farmers are being targeted.”

Montana Farmers Union president Alan Merrill said his organization supports efforts to stabilize fair trade among countries, but opposes trade deals that unevenly regulate imports and exports between the U.S. and other nations.

“In recent days, there has been a significant drop in wheat prices. This shortfall directly affects Montana farmers,” Merrill said. “We ask that the administration continue to reduce the U.S. trade deficiency by supporting current Farm Bill programs that protect family farmers against market instability.”

Montana ranchers still enjoy access to Japan’s beef market, which totaled $1.5 billion last year, making it the United States’ top market, according to the U.S. Department of Agriculture.

This week, France moved a step closer to being able to export its beef to China, which had shut that country off from exports after a mad cow epidemic in Europe.

“Good news for the French beef sector for which the Chinese market is opening,” French President Emmanuel Macron said in a social media post.

The trade war with China began in March, when President Trump signed a memo announcing that the United States would take steps to protect American technology and intellectual property from discriminatory trade practices by China.

The alleged violations stem from China’s trade policies and actions undertaken in the country’s “Made in China 2025” initiative.

Trump’s sanctions on about 1,100 products come after what U.S. trade ambassador Robert Lighthizer said was an “exhaustive Section 301 investigation in which USTR found that China’s acts … are unreasonable and discriminatory, and burden U.S. commerce.”

“The simple truth is that when trading partners break the rules, there must be consequences,” Agriculture Secretary Perdue said. “China began raiding our economy long before a team of thieves infiltrated that Iowa cornfield, but President Trump aims to stop the larceny now.”

China’s alleged violations occurred after it was accepted into the World Trade Organization in 2001. It was supposed to revise hundreds of laws and regulations to bring the country into conformity with WTO trade practices.

However, the United States and other trading partners continue to encounter what they consider serious problems with China’s trade regime.

U.S. Customs and Border Protection will begin collecting this country’s additional 25 percent on Chinese duties on July 6.