The Waco-based Texas Farm Bureau is seeing its fears come to pass, as China responded to President Donald Trump’s proposed tariffs on steel and aluminum by announcing levies Monday on 128 items, including fruits, nuts, wine and pork.
By Tuesday, the Trump administration announced a new proposal for 25 percent tariffs on 1,300 Chinese products that represent $50 billion in imports, according to the Associated Press.
China did not target beef or soybeans in its tariffs announced Monday on $3 billion in U.S. products. The sparing of beef and soybeans represents a silver lining for farmers and ranchers in much of Texas. But officials worry the trade war will escalate and agriculture locally and nationally will become the “whipping boy,” as it often does when countries start trading punches.
According to the AP, the Chinese embassy in Washington issued a statement Tuesday condemning the Trump administration’s latest move and hinting Beijing would retaliate: “As the Chinese saying goes, it is only polite to reciprocate.”
“Very few products we raise here in Central Texas appear on the tariff list, but as an organization, we are concerned about everyone,” said Neil Walter, a local farmer and member of the Texas Farm Bureau board. “Just because we did not get shot at this time does not mean we’re home free.”
Walter said much of the squabbling over tariffs “is driven by personality, and I’m afraid it is going to get worse before it gets better.”
Zippy Duvall, president of the American Farm Bureau Federation, echoed Walter’s stance in a prepared statement.
“If the trade situation continues to deteriorate, our lives as farmers and ranchers will become more difficult,” Duvall wrote. “America’s farmers and ranchers export more than $21 billion of farm products to China, more than 20 percent of their production.”
Duvall said farm income from commodities has fallen about 50 percent the past four years.
“Retaliation in the trade arena makes our outlook even worse,” he wrote. “This could not be happening at a worse time for American agriculture. We expect all countries to trade fairly and we support enforcement of trade rules. But we also hope trade disputes can be resolved without harming an industry that is a bright spot on trade.”
The Texas Farm Bureau supports many of the Trump administration’s long-term initiatives on trade but is concerned about short-term damage to agriculture, said Regan Beck, director of government affairs for the Texas Farm Bureau.
“I’ve got to tell you, there is lot of support among farmers and ranchers for what the administration is doing. We understand, for example, that trade between the U.S., Canada and Mexico needs to be tweaked, and that a lot of other countries are not playing by the rules,” Beck said.
Central Texas produces significant amounts of corn, wheat and cattle, and all three could be caught up in wrangling on international trade, he said.
“Depending on how this situation escalates, I could see it putting some farmers out of business,” Beck said. “I think a lot of them are really just eking by right now. With less need for production, much more downward pressure could be exerted on prices they command.”
Beck said exports add about 30 percent to the value of a product.
The Greater Waco Chamber of Commerce is sponsoring a trip to Washington, D.C., early next month to meet with several members of Congress, including U.S. Rep. Bill Flores, whose district includes Waco. The subject of tariffs and their impact on trade and the Texas economy will become a priority, said Jessica Attas, the chamber’s director of public policy.
“We want to express the concerns of farmers, all of agriculture, as well as those of any business involved in creating products,” Attas said. “Texas is a leader in exports, and we want to keep it that way. We believe tariffs are counterproductive to what we’re trying to do statewide.”
The federal government needs to address unfair Chinese trade practices that hurt the workforce in the United States, Flores wrote in a statement Tuesday afternoon.
“While doing so, however, we must work to make sure that the American consumer and our domestic goods producers are not adversely impacted,” Flores wrote. “I am committed to working with the Trump administration to solve both issues, leveling the playing field on trade with China while balancing protections for hardworking American families, businesses, ranchers and farmers.”
Texas Department of Agriculture spokesman Mike Loeffler said it is too early to dissect the impact of China’s tariffs.
“This is what it looks like when America begins to be more proactive in protecting American trade and American jobs,” Texas Agriculture Commissioner Sid Miller wrote in a statement. “There’s going to be a reaction.
“I trust our president to negotiate a great deal for America and I trust our USDA secretary and my friend Sonny Perdue to stand up for U.S. ag producers. I’m in touch with Secretary Perdue on a regular basis and monitoring the situation on behalf of Texas ag producers.”
Todd Stoner, a broker with Disciplined Investors, said the stock market’s roller-coaster ride in recent weeks is due in part to the specter of tariffs.
“It’s well known China has unfair trade practices, and we want to change the status quo, but tariffs are a blunt instrument,” Stoner said. “The pork industry has been targeted with a tariff of 25 percent, and they will be crying out to the government for help. I’ve read some commentary to the effect China is targeting industries with political clout, who will make their feelings known.”
Two poultry producers, Sanderson Farms and Pilgrim’s Pride, both with plants in Waco, saw their stocks tumble during the first quarter. Stoner attributed that to jitters over tariffs and concern over China’s response.
“Some believe China is holding back on tariffs on soybeans, one of our more popular exports to that country, and on commercial aircraft,” Stoner said. “If President Trump were to impose higher tariffs, China would respond in kind. That would put additional pressure on the United States.”