Rising US-China trade tensions 'couldn't come at a worse time': Iowa agriculture secretary

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Jeff Daniels

Updated Tue, Sep 18, 2018, 7:44 PM

The ratcheting of the U.S.-China trade war is unfortunate and comes at a lousy time for farmers, according to Iowa Agriculture Commissioner Mike Naig.
The state official said farmers in Iowa are in the harvest season for key crops such as soybeans and corn, which are among the farm commodities already hit by China's tit-for-tat tariffs.
Beijing struck back against the Trump administration's new round of trade tariffs by imposing duties on $60 billion of American products, including cocoa powder and frozen vegetables.

American farmers have already been hurt by retaliatory tariffs from the U.S.- China trade war, and the ratcheting of tensions once again is unfortunate and comes at a bad time, according to Iowa Agriculture Secretary Mike Naig.

"As we head into the 2018 harvest season for corn and soybean out here in Iowa, this escalation of the trade conflict really couldn't come at a worse time," Naig said in an interview on CNBC's "Closing Bell."

On Monday, the Trump administration escalated the trade tussle with China by announcing tariffs of 10 percent on some $200 billion of Chinese goods . Those duties will jump to 25 percent on Jan. 1.

Beijing responded by imposing levies of between 5 percent and 10 percent on $60 billion worth of U.S. products effective Sept. 24. The new tariffs from China are on about 5,200 products and include cocoa powder and frozen vegetables as well as chemical products and certain aircraft, according to China's finance ministry.

China previously slapped tariffs on U.S. soybeans, corn, wheat, sorghum fresh fruit as well as nuts and certain dairy products. Beijing also has placed hefty import taxes on American pork products which now exceed 70 percent.

"It is impacting our markets and that's impacting our farmers," said Naig, a Republican. "Our farmers understand that they are issues that need to be resolved, particularly with China. But there is no doubt that the retaliatory tariffs are impacting our marketplace and that's impacting our producers negatively."

There's also concern China could slap additional tariffs on agricultural and food products previously targeted with import taxes.

Naig was asked if the impact of the trade war could hurt Republicans in the approaching midterm elections or erode support for President Donald Trump . "There's a lot that goes into that," he responded.

"Issues that ultimately impact the economics of Iowa and impact farmers' pocketbooks will impact the politics. But it's not as simple as just this one issue," he concluded.

Naig added, "Farmers are encouraged by the tax reform. They are encouraged by progress on regulatory relief, and so there's more to it than just the trade picture. But it's an important issue that absolutely will impact their pocketbooks."

Nearly $20 billion in U.S. agricultural exports went to China last year, with more than half of that amount coming from soybeans. The U.S. sold approximately 33 million tons of soybeans in 2017 to China, or just over a third of the beans imported by the Asian country.

The Iowa state official estimated that, with one third of Iowa's soybeans going to China, that market would be significantly hurt.

Iowa is also a major producer of pork, with about a third of the nation's pigs raised in the state. Exports of pork from the state last year totaled more than $1.1 billion.

Despite the damage from China's tit-for-tat tariffs, Naig said there was still optimism on the trade front with progress reached with Mexico. Mexico and Canada have been in talks with the U.S. over overhauling the 24-year-old North American Free Trade Agreement (NAFTA).

"Folks appreciate the fact that we seem to be making some progress here with NAFTA," said Naig, who noted that Canada and Mexico are Iowa's top two trading partners, so that development would be good news.

The Trump administration is moving forward with an agreement with Mexico and is open to having Canada join a deal. "If they don't, we'll simply go ahead with Mexico," Commerce Secretary Wilbur Ross said Tuesday in an interview on CNBC's "Squawk Box."

Naig added he hoped that momentum on NAFTA can be carried over to China and ultimately result in expanding trade opportunities to other markets, particularly countries in the Trans-Pacific Partnership (TPP) trade pact. With Trump pulling the U.S. out of the TPP to fulfill one of his campaign promises, the remaining 11 countries have now signed a new agreement.

"Re-engaging with some countries and expanding markets that were involved in the TPP agreement — Japan, Vietnam, South Korea — those would all be positive things too," Naig said.

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