U.S. farm aid flimsy bandage on deep trade war wound

Ann Santiago
August 1, 2018

If farmers hurt by President Trump's trade war deserve government assistance, as the president has proposed, than so do ME lobstermen, who are watching the lucrative Chinese market dry up, and the price of the steel in the traps they need rise.

After a reset in the strained alliance with the European Union last week, the USA signalled its new strategy to intensify the trade battle indefinitely.

Just as important, the leaders agreed in their joint statement to "work closely together with like-minded partners to reform the WTO and to address unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state owned enterprises, and overcapacity".

Aaron Putze, the communications director for the Iowa Soybean Association, said the development with the European Union underscores the administration's commitment to making progress on matters of trade, but added, "We remain steadfast in our call for progress to be made to resolve the trade dispute with China".

He again singled out China for what he said was an attack on the USA farm belt. Soybean prices had already been on the decline before Trump came into office, but farmers say that Chinese countermeasures have crippled that primary market and that the trade wars have made their economic road ahead even more treacherous.

EU officials said little had been given away by Juncker and that Europe had emerged as the victor by getting Trump to defer the threatened auto tariffs which would have hit European carmakers hard. Trump has long viewed America's trade deficit as the result of foreign companies and countries "stealing" from the United States, and he has blown hot and cold between confrontation and negotiations.

French President Emmanuel Macron appeared to challenge the deal, saying on Thursday he would not discuss agriculture in talks with the United States. In Europe, alarm bells have been sounded over China's growing economic influence there. Juncker also agreed to buy billions of dollars more in US soybeans and natural gas.

"I've been surprised that up until now, markets seem overly sanguine about the risks" of a trade war between the world's two biggest economies, said David Dollar, senior fellow at the Brookings Institution and a former official at the World Bank and US Treasury Department.

"It's hard to predict how this trade war will develop and to what extent", Du Wanhua, deputy director of an advisory committee to the Supreme People's Court, said.

Since taking office a year ago, Trump has implemented policies to restrict what he sees as unfair competition from other countries.

USDA's press release stated that this one-time program was a short-term solution to offset farmers' economic losses while the Administration works on free, fair, and reciprocal trade deals. Simply because, when it comes to soybeans, the EU's appetite is not a voracious as China's, which in response to President Trump's tariffs on Chinese goods have imposed its own tariffs on Soybeans.

Seeking to quell unrest, the White House this week announced a package of $12 billion in aid to farmers being hurt by the trade wars.

"The European Union is going to start, nearly immediately, to buy a lot of soybeans - they're a tremendous market - buy a lot of soybeans from our farmers in the Midwest, primarily", Mr. Trump said, as he stood next to European Commission President Jean-Claude Juncker. Roughly 500 of those jobs were added in March thanks to the tariffs - another 300 are projected to be added by this fall, which is likely what Trump was referring to when he said "far more" jobs than projected would be added here.

But Nixon, who served as Missouri's governor from 2009 to 2017, said he believed Trump, who won Missouri by 19 percentage points, had nowhere to go but down in the Show-Me State, largely because of trade.

A more conciliatory tone emerged from Mnuchin, who told CNBC the United States was willing to reopen trade talks with China if Beijing was willing to make "serious changes", as he said the European Union had indicated it was willing to do. Barriers would be reduced and trade is services, chemicals, pharmaceuticals, and agricultural products will increase. Beijing knows that China is the single largest importer of USA soybeans, and that about 96 percent of US soybeans are grown in 18 states - all but two of which voted for Trump in 2016.

Last Tuesday, Trump announced a $12 billion aid package to farmers impacted by China's retaliatory tariffs.

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