First, the freshly inaugurated president withdrew from the Trans-Pacific Partnership treaty, a 12-nation pact that was expected to boost U.S. agricultural exports by more than $7 billion annually over the coming decades, according to the U.S. Department of Agriculture.
Then, Press Secretary Sean Spicer said the president was thinking about financing his long-promised southern border wall with a 20 percent tax on “imports from deficit countries, like Mexico.”
That announcement, followed by a flurry of clarifications and caveats, appears to be part of a plan for a massive tax overhaul aimed at altering the trade balance country by country. U.S. farmers, who get about 20 percent of their annual revenue from trade, could be hit especially hard if countries choose to retaliate. Consumers, too, would suffer if a border tax increases the price of foreign food.
U.S. agricultural and related products — including dairy, meat, forestry products and fish — amass a $5 billion trade surplus with the world, according to the Department of Agriculture. Among the biggest sellers are soybeans, grains, dairy products, meat, nuts, hay, wine, fruit and vegetables.
Farmers and ranchers from Florida to Washington have experienced double-digit growth in many of these commodities since the mid-1990s, according to the USDA.
For example, exports of corn from Iowa to trade-agreement countries more than doubled in the past decade, with more than three-quarters of the state’s shipments going to Mexico, a partner in the North American Free Trade Agreement. Louisiana’s exports of soybeans to trade-agreement partners rose 15 percent in the same period, driven largely by trade with Latin American trade pact countries.
But no state has more at stake than California. It leads the country in agricultural revenue, and its farmers and ranchers are twice as dependent on foreign trade as the country as a whole. Last year, growers in the state earned $21 billion from trade — about 44 percent of their total revenue.
Without California, the U.S. would not have exported a single tree nut, table grape, raisin, olive oil drum, garlic clove, artichoke, fig, date, kiwi or dried plum.
The Golden State last year also exported more than 90 percent of the wine, processing tomatoes, avocados, carrots, broccoli and celery in the U.S. California’s berries, peaches, nectarines, apricots, melons, oranges, lemons, tangerines, mandarins, spinach, lettuce, seasonal vegetables and rice constituted more than half the U.S. exports of those commodities.
Some of the countries most responsible for the United States’ overall trade deficit are California agriculture’s best customers — China and Mexico among them.
As recently as Jan. 28, Trump accused China of protecting its exports by depressing the value of its currency, the yuan. He has called the North American Free Trade Agreement, which links the U.S. with Canada and Mexico, “the worst trade deal ever” and threatened to tear it up.
The comments drew quick reaction from California officials, even as they scratched their collective heads over what Trump actually intended to do.
Altering NAFTA “starts to create some market turmoil, which ripples out through the supply chain — not just the farmer but the transporter, the processor, the ports, longshoremen. It affects a lot of jobs,” said Josh Rolph, manager of federal policy for the California Farm Bureau Federation.
“The U.S.-Mexico trade relationship is very important. We would be concerned to see that relationship negatively affected,” said Ken Barbic, senior director of federal government affairs for the Western Growers Association, an agricultural industry group.
Mexico supplied the U.S. with more than $5 billion in fresh vegetables, $1.4 billion in processed fruits and vegetables, $4.5 billion in fruit and $2.8 billion in beer and wine last year, according to the USDA. All could be targets of a tax.
California’s top exports to Mexico — dairy, forestry products, prepared foods and fresh fruit — could find themselves in the political cross hairs.
Likewise, taxes could be imposed on Canada’s imports of wood products, processed foods and fish, and the country potentially could retaliate against the fruits and vegetables, wine and beer, nuts and processed foods that California exports north.
Even a small alteration in trade — a strike, slowdown or other protest in Mexico, for example — could hit consumers, who expect fruits and vegetables in the produce aisles year-round, regardless of growing seasons.
Source: BendBulletin
Link: http://www.bendbulletin.com/business/5059728-151/us-farmers-could-be-hit-hard-in-a
