Opinion: U.S. agriculture will be big loser in the steel-aluminum trade dispute

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OK …true confession.  I have a deep fascination with all things China.

Growing up, I spent endless evenings on my Radio Shack shortwave listening to English broadcasts from China Radio International, stories about culture, shows about music and yes even “Learn Chinese.”

If I had a bucket list, a month-long trip to China to see the stuff on the unbeaten paths would be on it.

So when I became director of agricultural programming for NPR member station Illinois Public Media,  I got a catbird seat to see how China operates in global trade, at least as it comes to agricultural goods like corn and soybeans.

And what I learned (call it a Dickey-ism) is this:  When it comes to agricultural goods, China marches to its own drumbeat, conventional global trade policies notwithstanding.  Full stop.

Want an example?

In March of 2014, China embargoed all U.S. corn exports containing the unapproved corn bug resistant GMO strain MIR 162 produced by Syngenta.

By July, China expanded their embargo to include dried distillers grains containing MIR 162.

At the time China said approval of the strain would be approved quickly, but it did not happen until December 2014.

So here’s the thing.  China’s embargo and the uncertainty it created was a reason that U.S. corn futures tanked.  China had no interest in paying over $5 a bushel for U.S. corn, especially in the wake of record domestic corn production of 218 million metric tons due to an expansion of planted acres.

By December 2014 when China lifted its embargo U.S. corn futures were trading around $3.75 – much more favorable for Chinese importers.

The moral – China will do what it wants and is not afraid to weaponize trade in agricultural goods to get its way.

Flash forward to January 2018.  The U.S. slapped significant tariffs on import of foreign washing machines, mostly to stem the flow from China and South Korea.

It didn’t take even a month for China to begin investigating what it called dumping of U.S. sorghum on  Chinese markets.

Weaponization indeed.

Which takes us to the latest brewing trade conflict.  The POTUS says he is prepared to start a trade war with the world over U.S. steel and aluminum, imposing tariffs of 25 percent on foreign steel and 10 percent on foreign aluminum.

The White House is citing national security concerns for the tariffs.

But I’m here to tell you that if the tariffs come to fruition it will be U.S. agriculture that will suffer.  Bigly.

China may produce about half the world’s steel but it’s not even in the top ten among exports to the U.S. (Canada is number one; more on that in a second).

In aluminum, China is the number four exporter to the U.S.

So it’s possible that China will not retaliate say against U.S. soybeans tit-for-tat, especially given the current soybean crop failure in Argentina.  But then again, this is China we are talking about.  And nothing is beyond possibility.

As for Canada, they are truly angry and are threatening tariffs of their own against the U.S.

I would not be surprised in the least if Canadian tariffs were to include U.S. wine exports.

And in a jaw dropping move, the POTUS now says steel and aluminum tariffs will remain in place with Canada until the U.S. gets a good deal on NAFTA re-negotiations.

All this to show that U.S. agriculture is now the tip of the spear in a pending new global trade war.  And U.S. farmers and ranchers could end up being the casualties.

About Dave Dickey

Dave Dickey

Dickey spent nearly 30 years at University of Illinois at Urbana-Champaign’s NPR member station WILL-AM 580 where he won a dozen Associated Press awards for his reporting. For 13 years, he directed Illinois Public Media’s agriculture programming. His weekly column for Big Ag Watch covers agriculture and related issues including politics, government, environment and labor. Email him at dave.dickey@investigatemidwest.org.

This column reflects the writer’s own opinions and not those of Big Ag Watch.

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