By Katie Lobosco, CNN
It’s been nearly four years since China imposed tariffs on U.S.-grown soybeans in a trade war with then-President Donald Trump, and they remain in place despite the change of administration.
President Joe Biden has chosen to leave in place US tariffs imposed by his predecessor in 2018 on $350 billion worth of Chinese goods. In turn, Beijing left its retaliatory tariffs on certain agricultural products, including soybeans, and certain products made in the United States.
Chinese tariffs are hurting American farmers by making US-grown soybeans more expensive for Chinese buyers, who bought the majority of US exports before the trade war.
“We’ve been living with tariffs for so long, it’s just the way we do business now,” said Dave Walton, an Iowa farmer who saw his soybean prices plummet after restrictions were put in place. prices in 2018.
His farm is located near the Mississippi River, where his soybeans are typically loaded onto a barge and then shipped overseas after reaching the Gulf of Mexico. This location facilitated the export of his harvest.
But this year, Walton is trying to rely less on overseas buyers. Instead of exporting his soybeans, he sells them to a national company which will use the harvest as seed.
Walton remains frustrated with the Biden administration for leaving U.S. tariffs in place. If trade tensions ease, Beijing could also lift tariffs on US soybeans. He is also frustrated that the administration has so far failed to appoint people to two key agricultural trade positions: the role of chief agricultural negotiator in the office of the U.S. Trade Representative and the position of deputy Secretary of Commerce at the United States Department of Agriculture remain open.
“It signals to me that trade is not a priority for the administration. If it was a priority for them, they would have those trade positions filled and they would work on updating trade agreements with China and other countries,” he said.
Biden leaves tariffs in place
Earlier this month, the Biden administration took a first step toward completing a four-year statutory review of U.S. tariffs on Chinese goods — but officials gave no indication the review will result in the abolition of tariffs.
So far, the Biden administration has resisted pressure from the U.S. business community to lift tariffs, which have risen as inflation rises. In an interview last Monday At the Milken Institute’s global conference, U.S. Trade Representative Katherine Tai said all the tools were on the table to fight inflation, but refrained from saying whether lifting tariffs should make any part.
In 2020, a truce was reached between Trump and Chinese President Xi Jinping. Both sides have stopped adding new fares under what is known as the phase one agreement. Beijing has also agreed to increase its purchases of American goods and agricultural products.
But China fell short of its target, buying only 57% of the US exports it pledged to buy by the end of 2021. While agricultural exports to China have returned to levels of 2017, they did not meet China’s commitment. Soybean exports fell more than 30% below target.
Biden suggested earlier this year that China’s failure to meet its commitments was the reason he was leaving the tariffs in place.
“It’s uncertain,” the president said in January when asked if it was time to start lifting some of the tariffs.
“I would like to be able to be in a position where I can say that they meet commitments, or more of their commitments, and be able to lift some of it. But we are not there yet,” he added.
Impact on US soybeans
US soybean exports fell sharply immediately after China imposed the tariffs up in 2018. Soybeans lost more than 75% of their export value to China between 2018 and 2019, according to a USDA report.
But soybean sales to China have nearly rebounded to pre-trade war levels. Soybean exports to China were only 1% lower in the year after the phase one agreement was signed compared to 2017, according to the USDA report.
Still, it’s hard to know what would have happened without the tariffs in place.
“The overall impact of tariffs on trade is a much harder thing to sort out since the ceasefire,” said Joseph Glauber, a senior fellow at the International Food Policy Research Institute and a former food economist. chief at the USDA.
However, he thinks it is “obvious” for the United States to lift the tariffs. “It would help normalize the trade,” Glauber added.
Some farmers fear they have permanently lost some of their Chinese buyers who have turned to other countries for soybeans over the past four years.
While US exports to China increased after the phase one agreement was reached, exports from other countries grew even faster. As a result, the United States’ market share of China’s agricultural imports is now lower than it was before the trade war: around 17% in the first year of the first phase, compared to 20% in the first year. during the 2017 calendar year, according to the USDA.
There are also non-tariff barriers to trade imposed by China. Chinese commercial buyers need government approval to import US soybeans.
“Importers in China have to take steps to get access to American soybeans. There is clearly a cost to doing business,” Glauber said.
But trade issues have taken precedence over other more pressing concerns for farmers, according to the Purdue University/CME Group Agricultural Economics Barometer. In April, 42% of producers said rising input costs were their top concern.
While Walton remains frustrated with the Biden administration’s lack of action on trade, he also said he’s worried about rising costs, particularly for herbicides.
“I have seen cases where the price of herbicide has doubled or tripled. … We didn’t have our first choice, but we finally got a herbicide that we can use to protect our crop,” Walton said.
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