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Perdue Sees ‘Legitimate Concern’ in Farm Country Over Trade Issues

The farm sector is “rightfully concerned” that President Trump’s plan for steep tariffs on imported steel and aluminum could trigger retaliatory tariffs on U.S. ag exports, said Agriculture Secretary Sonny Perdue. The second-largest U.S. farm group called on Trump to focus on “specific countries who are dumping or otherwise violating trade rules” instead of sanctioning the entire world.

Trump said last week that he would impose tariffs of 25% on steel and 10% on aluminum imports. White House press secretary Sarah Sanders said the administration was on pace for a formal announcement of the tariffs by the end of this week, with “potential carve-outs for Mexico and Canada, based on national security and possibly other countries, as well.” Steelmaking nations have warned they will punish U.S. exports if unfair tariffs are levied. The EU has said its targets would include more than $1.2 billion in U.S. corn, rice, orange juice, tobacco, liquor, and other food and ag products.

“There is probably some legitimate anxiety over the trade issues,” Perdue said during a Wall Street Journal luncheon at USDA headquarters (shown in image above). Agriculture “is often the first bullet fired” during trade disputes, he said. Exports provide 20% of U.S. farm income. Besides the potential impact on exports, tariffs could add to the cost of farm equipment, grain bins, and building materials.

Nonetheless, Perdue was sanguine about the outcome. President Trump uses the “instinctive” negotiating skills of a businessman to push opponents off balance and win concessions, he said. If the threat of tariffs on metals prompts Mexico and Canada to be more forthcoming on NAFTA, “that’s a good result.” Canada and Mexico generate one third of U.S. food and ag trade. They also are major steel suppliers and would be affected by tariffs, although China is viewed as the villain in the steel trade.

The National Farmers Union, an advocate of “fair” rather than “free” trade, said that while it understood Trump’s motives on steel and aluminum, “his tactics to this point have insulted and alienated our closest trading partners. Instead of focusing on specific countries who are dumping or otherwise violating trade rules, the administration is proposing to sanction the entire world, which adds more volatility to already disturbed trading relationships.” In a statement, the NFU board urged Trump “to adopt a positive, proactive approach to establishing a fair trade framework that benefits family farmers, ranchers, and rural communities.”

Iowa’s congressional delegation — two senators and four representatives — asked Trump “to reconsider this proposal” of steel and aluminum tariffs “given the consequences this will have on states like Iowa, rural communities throughout the nation, and on America’s farms.”

Agriculture is a sticking point in negotiations for a new NAFTA. Among other things, the U.S. wants Canada to abolish its supply-management system for dairy, poultry, and eggs. The system limits imports and sets a minimum price for domestic products.

Nearly three dozen wheat groups encouraged U.S. trade representative Robert Lighthizer to prioritize a U.S. return to the 11-nation Asian free-trade pact, formerly called the Trans-Pacific Partnership. Trump fulfilled one of his campaign promises by withdrawing from the TPP soon after he took office, though he said early this year that he would reconsider membership if the U.S. got a “substantially better deal.”

In a letter to Lighthizer, the wheat groups said the U.S. share of Japan’s wheat market, typically 50%, would be halved under the TPP-11 package, which awards lower tariffs to member nations. Those nations include Canada and Australia. “The president has promised to negotiate great new deals. American agriculture now counts on that promise, and American wheat farmers — facing a calamity they would be hard-pressed to overcome — now depend on it.” The National Association of Wheat Growers and export-promoter U.S. Wheat Associates organized the letter.

“I think they would be happy to have the United States join the deal, but I don’t know if it would satisfy the president,” said Perdue, when asked at the luncheon about the TPP.

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