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home : most recent : statewide implications December 11, 2018

4/6/2018 10:42:00 AM
Agricultural tariffs are stressing some Indiana farmers

Dave Taylor, Tribune-Star

TERRE HAUTE — As Terry Hayhurst prepares for spring planting, he has a lot more on his mind this year than the weather, preparing his equipment for the field and ensuring supplies are delivered on time.

The 56-year-old farmer grows corn and soybeans and has a few dozen head of Hereford cattle on 1,350 acres in southern Vigo County.

All three farm products are on a list of more than 100 items for which China announced new tariffs Wednesday. The action came in response to previously announced U.S. tariffs of up to 25 percent on about 1,300 Chinese products sold in America, including steel and aluminum.

Already this year, Hayhurst noted, China has purchased fewer soybeans from the U.S. and more from South America.

“All of these products are commodities to a certain extent,” he said. “When they buy from somebody else, that means there are still bushels gone from whatever supply there is. We’d like to get the sale for ourselves, but product is still moving.”

If a product isn’t selling as much the price comes down and “all of these processes just kind of work against one another,” Hayhurst said.

“China has been a bad actor a long time in the way they treat world trade,” Hayhurst said. “Some of the stuff the Trump administration is doing (concerning tariffs) is almost necessary. Unfortunately, in trade wars such as this, agriculture gets hit a little harder and that’s the reason ag gets up in arms pretty fast.”

The American Soybean Association predicted a “devastating” impact if tariffs are placed on soybeans and soy products.

“ASA has consistently raised our significant concern since the prospect for tariffs was raised. Now this is no longer a hypothetical, and a 25 percent tariff on U.S. soybeans into China will have a devastating effect on every soybean farmer in America,” ASA President John Heisdorffer said in a news release.

But Trump has said there is no trade war, tweeting “that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.”

In one way, the agriculture industry was surprised Trump initiated tariffs, said Bob White, director of national government relations with the Indiana Farm Bureau.

“When Mr.Trump was a candidate, he talked about tariffs, he talked about steel and he talked about the trade imbalance and then last year he rattled the sword on NAFTA, (which) for the Midwest farm group has been a godsend,” White said. “It looks like NAFTA is on its way to a successful renegotiation. … That looks pretty good, but it will not take the place of the China market.”

U.S. producers have had a surplus of grain that has driven prices lower and “led to a downward trend line in the farm economy,” he said. “If the export market goes away then you’ve got triggers to basically create a bigger down market for agriculture.”

And the impact of the tariff battle may spread from the farm to other agribusinesses in Indiana, White said.

“It will affect Cummins and Caterpillar,” he said. “Both of those two companies export machinery and equipment to China, which has a growing market.

For all the talk of tariffs, none has taken effect.

A required public hearing is scheduled for May 15 before any new U.S. tariffs can actually be implemented. The Chinese foreign ministry has said it is sincere in wanting to negotiate the issue and U.S. Commerce Secretary Wilbur Ross cold CNBC negotiations would not be surprising.

Indiana Sens. Joe Donnelly and Todd Young released statements Wednesday concerning the Trump Administration’s tariffs.

“We all agree that China cheats and needs to change its behavior,” Donnelly said. “In response, we need to take measured and precise action to protect the steel and aluminum industries and prevent intellectual property theft. That’s how we best ensure Hoosiers —including manufacturers, steelworkers, and pork, soybean, corn and all of our farmers—can continue to sell quality products fairly in markets all over the world. I’d like to see the Administration crack down on bad actors like China in a targeted way and avoid a blanket approach that hurts American interests at the same time.”

Young said, “I will continue to support trade actions that require China to adhere to global fair trade rules. The United States must work with our allies to deter China’s continued utilization of deceptive and unfair trade practices. Going forward, I will work with the administration to ensure we strategically combat China without detrimentally impacting Hoosier stakeholders.”

The U.S. Department of Agriculture has said Illinois, Indiana, Iowa, Minnesota and Nebraska would likely be hit hardest by China’s tariffs, according to the newspaper Roll Call.

The Indiana Farm Bureau’s White is concerned about what could happen if the world’s two largest economies continue down the same road on trade matters.

“If ... the perfect storm comes together there may be some farmers who go out of business in 2018,” he said.

Related Stories:
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• Potential Chinese tariff can be a gut punch to West Central Indiana soybean industry
• How steel and aluminum tariffs can affect Lafayette manufacturers
• OPINION: Exports, imports and Indiana's economy
• COMMENTARY: Donald Trump versus Adam Smith and tariffs
• Trade war? North central Indiana area farmers waiting, aren't panicking just yet
• Tariffs on imported steel and aluminium could cost IU millions
• Officials, experts say steel tariffs will hurt Kokomo industries
• COMMENTARY: Tax cuts and new tariffs aren't complimentary

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