China’s retaliatory tariffs on American goods will largely affect agricultural commodities, and Wisconsin’s ag producers could be hit especially hard.
In response to recently imposed U.S. tariffs of 25 percent on steel and 10 percent on aluminum, China released a list of 128 items with newly increased tariffs — 94 of which are agricultural, while the rest are on steel and aluminum. Of the agricultural items, 86 are being hit with a 15 percent hike and eight are getting a 25 percent hike.
Importantly, the new tariffs stack with existing ones. For example, cranberries were already subject to a 30 percent tax; that now rises to 45 percent.
Cranberries are one of Wisconsin’s most important agricultural exports, with the state’s production making up over 60 percent of the national crop.
“China is an important new market for us, and we have been working hard, both in Wisconsin and as an industry, to increase demand in the country in recent years,” said Tom Lochner, executive director of the Wisconsin Cranberry Growers Association. “It is disappointing that amid such positive growth, we are caught up in an impending trade dispute that could negatively impact our growers.”
Lochner says Wisconsin growers support free trade, and hope some sort of agreement can be reached that will “allow us to continue our important role in providing cranberry products to consumers in China.”
The 15 percent increase on ginseng is expected to harm Wisconsin’s industry for the crop, according to the Ginseng Board of Wisconsin, as the state produces up to 95 percent of the country’s ginseng production.
Nuts appear on the list 14 times, each with a 15 percent increased tariff. Wisconsin’s top agricultural export category includes nuts along with fruit and vegetables, with $341 million in exports last year according to the state Department of Agriculture, Trade and Consumer Protection.
Chinese importers of U.S. pork will see their tariff rise from 12 percent to 37 percent. Since the rate for the United States’ biggest pork competitors stays at 12 percent, the American Farm Bureau expects the U.S. competitive position to “quickly deteriorate.”
According to a 2017 economic impact study from the Wisconsin Pork Association, about 10,000 jobs in the state are involved with the pork industry. Based on projections from 2016 production levels and prices, about $587 million of gross state product is supported by Wisconsin pork.
“Restrictions like this on important export markets will have negative consequences on all pork producers, including those in Wisconsin,” said Jim Monroe, senior communications director for the National Pork Producers Council. He added one in every four hogs in the country is being raised for the export market.
After China announced tariffs on these 128 goods, President Trump announced the United States would impose more tariffs on Chinese goods valuing $50 billion. In response, China named 106 more items for which 25 percent tariffs could be imposed, with soybeans at the top of the list.
China imported $13.9 billion worth of U.S. soybeans in 2017. Wisconsin ranks 13th in the United States for soybean production, according to the Wisconsin Soybean Association. And 65 percent of Wisconsin soybeans are exported, with much of that demand being driven by China.
Many fear these escalating tariffs between the United States and China could lead to an all-out trade war.
According to American Farm Bureau Federation President Zippy Duvall, American farmers and ranchers export over $20 billion in farm products to China, making up more than 15 percent of all U.S. ag exports.
“Farm income across commodities has fallen by about 50 percent over the past four years. Retaliation in the trade arena makes our outlook even worse,” Duvall said. “This could not be happening at a worse time for American agriculture.”
China is Wisconsin’s third-largest trade partner for agricultural goods, with $299 million in exports last year. That’s up 27 percent from 2016, when the state exported $234 million to China.
See a recent story focused on the state’s ginseng producers: http://wisbusiness.com/index.iml?Article=390739
See the first 128 tariff increases: http://www.fb.org/market-intel/chinas-response
See the second list of 106 tariff increases: http://www.farmersforfreetrade.com/wp-content/uploads/2018/04/retaliation-list-301.pd
–By Alex Moe