China fires back on U.S. tariffs

By Jessica Domel

Tariffs on half-a-trillion dollars in goods hang in the balance as the world’s two largest economies engage in escalation of tariff increases.

At 11 p.m. Thursday (Central Time), the United States began implementing a 25 percent tariff on an estimated $34 billion in Chinese exports to the U.S.

Shortly after, Chinese officials retaliated with tariffs on $34 billion U.S. exports, including soybeans, sorghum, cotton, beef, poultry, pork and other agricultural commodities.

“It hits a wide swath of U.S. ag production,” Dave Salmonsen, senior director of Congressional Relations for the American Farm Bureau Federation, said in an interview with the Texas Farm Bureau (TFB) Radio Network. “These are going to be 25 percent tariffs. So if you’re in business of sending things to China consistently like meat people are, you’ll see tariffs go on and they’ll be there for a while.”

There is no end date for the applied tariffs.

“These tariffs, which the U.S. put on China and China retaliated, are really meant to get the two sides talking more about some of the U.S. complaints about Chinese business practices,” Salmonsen said. “So that could go on for a while.”

The tariffs could increase costs for the products with the tariffs.

“There could be short-term impacts of maybe not selling as much product into China because U.S. products will be more expensive with the tariff. For products in the U.S., it would have downward pressure on prices,” Salmonsen said. “If these go on for any length of time, Chinese buyers–they have to satisfy their customers–could be looking elsewhere.”

According to Bloomberg, items affected by U.S. tariffs include farm plows, semiconductors and airplane parts.

The Chinese Minister of Commerce said the United States has ignited the largest trade war in economic history, Xinhua News reported.

Salmonsen said he wouldn’t call it a trade war.

“The tariffs are meant for the purpose here of stimulating and getting the sides to talk, and that’s what we’re calling for,” Salmonsen said. “I think the use of that term implies this is an implacable or this is a never-ending situation, and this situation could quickly come to an end if the two sides got together and could come to an agreement.”

On Air Force One Thursday, Trump told reporters there will be tariffs on another $16 billion in Chinese goods in two weeks. He said there’s potential for tariffs on an additional $500 billion in Chinese goods.

“Hopefully we can contain this set and this will get resolved so it doesn’t go further and get escalated into ever-increasing tariffs,” Salmonsen said.

The U.S. is also considering tariffs on automobiles and parts imported into the United States, which could invite retaliatory tariffs from China and other countries.

“We import over $350 billion a year from a variety of countries of those things,” Salmonsen said.

Russia, the European Union, Canada and Mexico have all announced or started levying tariffs on U.S. exports as a result of a 25 percent tariff on steel and a 10 percent tariff on aluminum imported into the United States.

“The people who are really being hit a lot are pork producers,” Salmonsen said. “We sell over a billion dollars a year in pork to China. They were hit with a 25 percent tariff earlier in April as retaliation for the U.S. tariffs on imported Chinese steel and aluminum products. They’re also on this 25 percent list for this current set of tariffs.”

Pork producers are facing a 50 percent tariff when selling specific pork products into China.

“If you add that to the existing base tariff that’s there, trying to get pork into China these days is facing almost a 70 percent tariff. They’re concerned that they’re being priced out of that market,” Salmonsen said. “At the same time, (on July 5) Mexico put 20 percent tariffs on pork imports. That’s the largest pork export market the U.S. has at over $1.5 billion a year.”

U.S. exports are going to be higher priced in a variety of markets for a long variety of products, Salmonsen said.

“It’s hard and it is disruptive to try to find new markets and try to find a place for that. There are costs throughout the system whether it’s farmers, processors, transportation industry. There’s a saying that ‘goods will find a home at a price, and that price is usually lower,'” Salmonsen said.

Farmers and ranchers right now should consider what could happen if the tariffs continue and tell their story, according to Salmonsen.

“From a Farm Bureau point of view, we’re telling our stories to our Congressmen and Senators, to the administration and getting it out to the public so people understand this approach has costs for different parts of the economy, and one of the places where it is going to impact people directly as time goes on is agriculture,” Salmonsen said.

The tariffs that were implemented Thursday evening were announced by U.S. President Donald Trump June 15.

“These tariffs are being imposed to encourage China to change the unfair practices identified in the Section 301 action with respect to technology and innovation,” Trump said. “They also serve as an initial step toward bringing balance to our trade relationship with China.”

On June 20, a spokesman for the Chinese Ministry of Commerce said the spokesman said if the U.S. “loses its reason” and releases the tariff list, China will take powerful and comprehensive action.

“After announcing the tariffs on $50 billion worth of imports from China, the U.S. has escalated its move and threatened $200 billion worth of Chinese goods for additional tariffs,” a spokesman for the Chinese Minster of Commerce said. “The practice of extreme pressure and blackmail goes against the consensus reached by both parties on many occasions, disappointing the international community.”

U.S. Trade Representative Robert Lighthizer said he supports the president’s action.

“The initial tariffs that the president asked us to put in place were proportionate and responsive to forced technology transfer and intellectual property theft by the Chinese,” Lighthizer said. “It is very unfortunate that instead of eliminating these unfair trading practices China said that it intends to impose unjustified tariffs targeting U.S. workers, farmers, ranchers, and businesses. At the President’s direction, USTR is preparing the proposed tariffs to offset China’s action.”

China’s list of targeted items includes the following U.S. exports: soybeans, beef, cotton, corn, ethanol, distillers’ dried grains, grain sorghum, wheat, cranberries, orange juice, tobacco, whisky, pork, poultry, rice, dairy products and a variety of fruits, vegetables and tree nuts.

The list covers nearly 90 percent of all U.S. agricultural exports to China.

Trump said previously the tariffs on Chinese goods are the result of an investigation in-to China’s use of data and intellectual property from U.S. businesses.

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