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Promise of Japan Deal Caps Trump’s Turbulent Weekend on Trade
In a 48-hour span starting Friday, President Trump roiled global markets by Tweeting his intention to again raise tariffs on China and ordering U.S. companies out of the country, then appeared to backpedal, saying at the G7 summit he was having “second thoughts” about the U.S.-Sino trade war. The weekend ended with a bit of potentially good news on trade, when Trump and Japan President Shinzo Abe announced an agreement “in principle” on a deal that would include Japan buying surplus corn from the U.S.
As Politico reported, Abe said Japanese farmers have been struggling with “insect pests” on some of their own agricultural products, “and we believe that there is a need for us to implement emergency support measures for the Japanese private sector to have the early purchase of the American corn.”
U.S. Trade Representative Robert Lighthizer described the corn purchase, assuming it actually happens, as “extremely important to our farmers and ranchers.”
It’s been a rough year for U.S. corn farmers. In late June, USDA analysts forecast plantings of just 86.7 to 87 million acres after a rainy and cold spring, well below the 92.8 million acres that farmers had planned to seed. The 6% downturn in plantings could mean the smallest harvest since drought-shriveled fields in 2012, assuming normal weather and yields.
Under the deal discussed announced at the G7 summit, Japan also would “slash tariffs on U.S. beef, pork, and other agricultural products, while continuing to face tariffs on its own auto exports,” Bloomberg reported.
The trade problem with China, meanwhile, looks likely to get worse, as Trump quickly denied that he was reconsidering his announcement on Friday to levy additional tariffs on $550 billion in Chinese goods. The talk of higher tariffs came hours after China “unveiled retaliatory tariffs on $75 billion worth of U.S. goods,” including a number of agricultural products,” Reuters reported. This prompted “the president … to demand U.S. companies move their operations out of China,” something he has no legal authority to do.
Farm groups, frustrated by the long and painful U.S.-Sino trade war, lashed out at Trump’s approach. [I]nstead of looking to solve existing problems in our agricultural sector, this administration has just created new ones,” said Roger Johnson, president of the National Farmers Union, in a statement. “Between burning bridges with all of our biggest trading partners and undermining our domestic biofuels industry, President Trump is making things worse, not better.”
Zippy Duval, head of the American Farm Bureau Federation, was more measured. “Farm Bureau is currently assessing the details of this announcement, but we know continued retaliation only adds to the difficulties farm and ranch families are facing and takes the situation in the exact wrong direction,” he said.
In 2017, the U.S. exported $19.5 billion of agricultural products to China. Last year that dropped to $9.1 billion, due to the ongoing trade dispute.