Food Business News - June 12, 2018 - 24
oncerns mounted that jolting
swings in U.S. trade policy and the
reaction of trading partners, both
those considered longstanding allies and
those viewed as adversaries in the geopolitical sphere, have brought the world
closer to trade war. The last couple of
weeks in May and the first week of June
saw rapid deterioration in this nation's
trade relationships with Europe, Mexico,
Canada and China.
On May 31, President Donald Trump
imposed increased tariffs on steel and
aluminum imports - 25% on steel and
10% on aluminum - from the European
Union, Canada and Mexico. The E.U. and
the United States' partners in the North
American Free Trade Agreement, Canada
and Mexico, had been exempted from the
increased tariffs that for other countries,
except those who agreed to accept limits
on their exports to the United States,
went into effect in April.
The condition for the exemptions was
that progress had to be made in addressing what the Trump administration said
were legitimate concerns over U.S. national security, which the administration
asserted was endangered by large imports
of steel and aluminum. The E.U. refused to
acknowledge the national security justification for the tariffs and would not agree
to limit its exports to the United States.
The exemptions given Canada and
Mexico were to prod those countries into
agreeing to a new NAFTA that would
include a provision requiring the agreement be renegotiated every five years.
This provision was a deal breaker for
both the Canadian and Mexican governments. The impasse in the NAFTA talks
triggered Trump's decision to impose the
tariffs on Canada and Mexico as well.
The E.U., Canada and Mexico
Food Business News
indicated they would retaliate by imposing tariffs on U.S. goods roughly equivalent to the value of their aluminum and
steel exports to the United States.
The E.U. earlier issued a 10-page
list of U.S. imports that would be subject
to increased tariffs in the event the
United States lifted its exemption to the
increased tariffs on steel and aluminum shipped to the United States. Corn
and rice were among U.S. agricultural
The Canadian government said
it would impose surtaxes or similar
against up to C$16.6 billion ($12.9 billion)
in imports of steel, aluminum and other
products from the United States. The
Canadian list of target products included
agricultural products, including some
dairy products, but emphasized industrial and other products.
The Mexican government said,
"Faced with tariffs imposed by the United
States, Mexico will impose equivalent
measures to various products such as
flat steel, lamps, pork legs and shoulders,
sausages and food preparations, apples,
grapes, blueberries, various cheeses,
among others, up to an amount comparable to the level of affectation."
China's aluminum and steel exports
to the United States were subjected to increased tariffs in April. China's retaliation
included a 25% tariff on U.S. pork products.
President Trump since threatened
to impose tariffs on an additional $50
billion worth of Chinese products if talks
between the two nations did not produce
an agreement that would reduce the U.S.
trade deficit with that country. The latest
of a series of high-level negotiations ended
last week with no agreement in sight.
Jim Heimerl, president of the
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Trade war looms
National Pork Producers Council and a
pork producer from Johnstown, Ohio,
reacted to Mexico's decision to impose
increased tariffs on U.S. pork products,
saying, "The toll on rural America from
escalating trade disputes with critically
important trade partners is mounting.
Mexico is U.S. pork's largest export
market, representing nearly 25% of all
U.S. pork shipments last year. A 20%
tariff eliminates our ability to compete
effectively in Mexico."
Vince Peterson, president of U.S.
Wheat Associates, added, "It is dismaying to see that common sense has not yet
prevailed in preventing these protectionist
measures. We've spent decades in critical
markets like Mexico, Japan, Europe and
others because we're committed to a lasting
trading relationship between their milling
and processing sectors and our farmers. If
this administration isn't careful, decades of
efforts by our farmers could be wasted.
"If this approach doesn't change,
U.S.W. worries that the ambitious bilateral trade agreement agenda, which was
promised and which we all look forward
to, will never get off the ground because
no country will be willing to take the
political risks needed to negotiate an
agreement with the United States."
Even as the ramifications of the
recent trade actions were being considered, the Department of Commerce, at
the direction of President Trump, has
launched a Section 232 investigation into
whether the imports of automobiles
and parts also constitute a threat to the
national security of the United States,
which could signal a new stage in what
may be an unfolding trade war. FBN
June 12, 2018