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Ramifications of Trump tariffs unclear for farmers

Ramifications of Trump tariffs unclear for farmers

June 10th, 2018 by Philip Joens in Local News

As the United States nears full-fledged trade wars with some of its closest trading partners, local farmers worry it could hurt their bottom lines.

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President Donald Trump on March 8 announced a 25 percent tariff on steel imports and a 10 percent tariff on aluminum. In April, the Trump Administration announced tariffs on $50 billion worth of Chinese goods because the administration alleged China coerced American companies into giving up intellectual properties.

The tariffs appear to be creating more opportunities for shuttered rust-belt steel factories. U.S. Steel announced Thursday it plans to restart a second blast furnace at its Granite City, Illinois, plant because of increased domestic demand caused by the tariffs. U.S. Steel previously re-opened a different furnace at the factory because and created 500 jobs in the process.

Countries are responding, though, by targeting rural states. China imposed 25 percent tariffs on soybeans, corn and beef. Mexico, Canada and the European Union, whose exemptions from the steel tariffs expired June 1, imposed tariffs on goods like whiskey, steel and potatoes.

Mid-Missouri farmers reached by the News Tribune said they feel caught in the middle of a global game of politics.

Brian Lehman, who farms about 500 acres of corn and 500 acres of soybeans near Versailles, said it's important for farmers to be involved and tell their state and federal representatives how they feel.

"You're kind of stuck, but you try to be involved," Lehman said. "You try to make a text or phone call or tweet to your representative to make a difference."

Jay Fischer, who farms northeast of Jefferson City in the Missouri River bottoms, said it feels like his industry is far removed from what's happening globally. Fischer worries about the impact of tariffs on U.S. corn and soybean farmers, but he also can see how the tariffs could help manufacturing towns.

"I just feel like (trade) needs to be fair," Fischer said. "I feel like that's where a lot of good things can come from tariffs if we can weather the storm. It may all work out in the end, but it could be a pretty rough storm to ride for a while."

Farming groups worry the tariffs could hurt the ag economy at a time when prices just started to rebound. Each year, the United States exports $14 billion worth of soybeans to China, according to the American Soybean Association.

Soybean exports made up about 23 percent of Missouri commodities exports and had a value of $2 billion in 2016. American Soybean Association President John Heisdorffer said May 30 it's critical for the White House to find a way for the Chinese market to re-open without tariffs.

"This is real money to a soybean farmer trying to determine when to sell their crop," Heisdorffer said in a news release.

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Of all the retaliatory tariffs imposed last week, one appears set to hurt the Midwest the most. Mexico announced plans Tuesday to impose tariffs of 20 percent on pork shoulders and legs.

Pork shoulders and legs are not as popular in the United States, where ribs and bacon are more popular. Many Mexicans use pork shoulder and leg meat to make some of the country's most popular dishes like carnitas and al pastor.

China also announced tariffs of 25 percent on U.S. pork products in April in retaliation for the steel tariffs. In 2016, Missouri exported 3 million hogs, totaling $882.6 million.

The United States exported $1.1 billion worth of pork to China in 2017, making it the No. 3 export market for U.S. pork.

"The toll on rural America from escalating trade disputes with critically important trade partners is mounting," National Pork Producers Council President Jim Heimerl said in a news release. "A 20 percent tariff eliminates our ability to compete effectively in Mexico."

Missouri Farm Bureau Vice President Todd Hays said exports represent about 20 percent of farmers' income. If the disputes cannot be resolved, he's optimistic U.S. goods will find new markets, like countries in South America.

"There's only going to be so much produced in the world, and there's going to be the same amount of consumption," Hays said.

Like others, Missouri Chamber of Commerce President Dan Mehan thinks the Trump Administration is using the tariffs as bargaining chips to renegotiate trade deals like the North Atlantic Free Trade Agreement. Mehan noted China recently offered to buy $70 billion worth of U.S. goods if the administration ended tariffs against Chinese products. While tariffs are created with long-term goals, Mehan said there could be short-term pain.

"The concern is that if the tariff war gets very heated, the overall impact of trade wars is negative," Mehan said.

Mexico did not announce tariffs on U.S. corn. But Missouri Corn Growers Association CEO Gary Marshall said the pork tariffs also will impact corn growers because hog farmers use corn to feed hogs.

"These are significant markets," Marshall said. "There's a lot of turmoil. It's creating a lot of consternation in farm circles, and we hope it gets settled."