Guest Commentary: Tariffs won’t solve long-term U.S.-China trade problems
~September 27th, 2018
For months we have listened to rhetoric that the trade war against China was due to their theft of U.S. technology. Then, in early July the U.S. placed additional tariffs on $34 billion of Chinese exports, leading to retaliation from China targeting U.S. corn, soybeans, pork, and other crops.
On July 24, the U.S. Department of Agriculture announced that it will authorize up to $12 billion in programs. These programs will assist agricultural producers to meet the costs of disrupted markets.
Unfortunately for all Americans, the total cost of the trade war is unlikely to be mitigated by $12 billion in programs for farmers, the majority of which will benefit Midwestern soybean producers.
The announced program will have narrow benefits for a select number of farmers and their supporting industries. It’s naïve to assume that we can calculate the trade war costs, ignoring the impact of other market factors, such as oversupply from previous years of production, low market demand domestically, and international market changes outside of China.
Unsurprisingly, long-term problems are arising from the trade war with China. The USDA’s bailout package only will hide the short-term costs while it adds to the long-term harm.
These long-term problems from the trade war include lost export markets as our competitors fill the void for China with more affordable nontariffed goods and as China grows its agricultural industry to bypass the need for U.S. grown commodities. Additionally, the proposed CCC program unintentionally pays farmers for crops they have never grown and incentivizes farmers to continue growing crops with no market destination.
Farmers would be better off if the tariffs were removed instead of more added and they were allowed to enter the free market. According to critics, President Trump’s bailout “is trying to put farmers on welfare.” And as Congresswoman Cathy McMorris Rodgers said in regard to the announcement, “Farmers want trade, not aid.”
Unfortunately for Washington state, our position in the trade war is even more precarious. Many of Washington’s 300-plus crops will be affected by nontariff barriers, including increased inspections, delays at the dock, shipment rejections, and lost markets.
As one of the most trade-dependent states in the nation, many Washington state jobs and companies will be hurt by the tariffs and will receive no relief.
Ninety-five workers were hurt by the latest round of lay-offs at REC Silicon, a Moses Lake-based polysilicon technology company. More families will experience layoffs if the tariffs against China continue.
Unfortunately, for these families, the $12 billion bailout going to farmers won’t help them at all, nor will it cover the long-term costs felt by farmers, companies, and Washington families as America’s trade war lingers on. Washington families and farmers will benefit when the tariffs are removed and trade is promoted.
Madilynne Clark is the Kennewick-based agriculture policy research director for the Washington Policy Center, a conservative Seattle-based think tank.