Trump's tariffs highlight danger of export-led agriculture

Update, March 5, 2018 ...and the danger of imported irrigation water

 No state has more at stake than California, which leads the country in agricultural revenue. Farmers and ranchers in the Golden State are twice as dependent on foreign trade as the country as a whole. World leaders also likely know that Trump enjoyed deep support in rural, agricultural areas, including much of the Central Valleysaid Dan Sumner, an economist who directs the Agricultural Issues Center at UC Davis.

Growers in California earned about $21 billion from trade,which amounted to about 44% of their total revenue in 2016, the last year for which full statistics were available, according to the California Department of Food and Agriculture. -- Geoffrey Mohan, Los Angeles Times, March 3, 2018

Agricultural foreign trade surpluses have been a bright spot in the US economy for decades; but whereas that may be good for GDP, Trump's decision to impose steel and aluminum tariffs, which will likely spark a trade war,  highlights the danger of an export-led agricultural economy for producers, many of them staunch Trump supporters. -- blj



Los Angeles Times
Trade war could spark food fight, California growers fear
Geoffrey Mohan
California's $45-billion agricultural industry, which includes nuts, dairy products, fruit, produce, livestock feed and wine, fears that a trade war sparked by a proposed tariff on imported steel will cause collateral damage to food-related exports. (Gary Coronado / Los Angeles Times)
Steel and aluminum may be the intended quarry of a trade war that President Trump has said would be "good" for the U.S. economy, but the casualties of the conflict could be food, agricultural economists warn.
China, the European Union, Mexico, Canada and other trading partners have sent strong signals that they may retaliate if Trump succeeds in imposing stiff tariffs on imports of steel and aluminum.
Each of those trading partners is a major buyer of U.S. agricultural goods, which amass a surplus of about $21 billion from worldwide trade, according to the U.S. Department of Agriculture.
"We could be in a really nasty trade spat, and we've seen that agriculture is usually a big target," said Josh Rolph, manager of federal policy for the California Farm Bureau Federation. "We are greatly concerned."


The wheat industry, which has pushed for more open international markets, blasted the proposal Friday. "It is dismaying that the voices of farmers and many other industries were ignored in favor of an industry that is already among the most protected in the country," a joint statement from the National Assn. of Wheat Growers and U.S. Wheat Associates said.



Food frequently bears a steeper retaliatory penalty in trade wars. Agricultural products perish quickly, faster than politicians can argue. And while few people riot over the price of a smartphone, laptop or car, they've been known to overthrow governments over a food shortage or a spike in the price of staples.

No state has more at stake than California, which leads the country in agricultural revenue. Farmers and ranchers in the Golden State are twice as dependent on foreign trade as the country as a whole. World leaders also likely know that Trump enjoyed deep support in rural, agricultural areas, including much of the Central Valley, said Dan Sumner, an economist who directs the Agricultural Issues Center at UC Davis.
Growers in California earned about $21 billion from trade, which amounted to about 44% of their total revenue in 2016, the last year for which full statistics were available, according to the California Department of Food and Agriculture.
Top trading partners include the European Union, Canada, China/Hong Kong, Japan, Mexico, South Korea, India, United Arab Emirates, Turkey and Vietnam.
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 accounts for 90% of the U.S. exports of wine, processing tomatoes, avocados, carrots, broccoli and celery. 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.
The U.S. agricultural sector narrowly dodged an international food fight in 2015, when Canada and Mexico made plans to retaliate against U.S. wine, fruits, meat, cheese and dozens of other items over a dispute involving mandatory labeling of meat by its country of origin. But Congress quietly changed course.
The last time Mexico retaliated in a large way against U.S. trade policy was in 2009-2011, over the U.S. reluctance to allow Mexican trucks to cross the border, as required in the North American Free Trade Agreement. The 90 retaliatory measures Mexico took carved an estimated $984 million out of U.S. exports to Mexico — half of that from lost agricultural sales, according to USDA economist Steven Zahniser.
Major farm and commodity groups have been reminding Trump since his inauguration that free trade has been very good for U.S. agriculture. Among the biggest sellers are soy beans, grains, dairy products, meat, nuts, hay, wine, fruit and vegetables.
Steel-exporting countries could dun any and all of those products, leaving more of them on the domestic market and dropping their price. A strong dollar over the past several years effectively did the same thing, and the farm lobby has not been happy about it.
"I think the list is just about any California commodity," said Sumner, at UC Davis. "Who knows how these things are decided. It's more political science than economics."
Farm Republicans revolt against Trump’s steel “tax.” Warn it’ll cost him at the polls.
By Franco Ordoñez And Lindsay Wise
Another White House surprise, another Republican revolt.
GOP lawmakers from farming states sharply warned President Donald Trump Thursday that his decision to impose tariffs on steel and aluminum imports will cost Americans consumers — and could be devastating for him at the polls.
Kansas Sen. Pat Roberts, the Republican chairman of the Senate Agriculture Committee, struggled to find words to describe his emotions after being blindsided by Thursday’s news that Trump would impose tariffs of 25 percent on steel and 10 percent on aluminum imports that sent stocks spiraling amid fears of a trade war.
“These are the people who voted for the president,” Roberts said. “These are his people. One county in Kansas even voted for him 90 percent and they’re not going to be happy at all about this.”
Roberts was joined in criticizing the proposal by U.S. Senator Ben Sasse, a Republican from neighboring Nebraska. Together they said the impact on farm states would be costly if foreign governments retaliate with tariffs on imports of U.S. goods, such as agricultural products.
“Let’s be clear: The President is proposing a massive tax increase on American families. Protectionism is weak, not strong. You'd expect a policy this bad from a leftist administration, not a supposedly Republican one,” Sasse said.
The stern admonishing was reminiscent of the pushback Republicans and conservatives gave Trump on immigration following a meeting in January.
However, Trump said the tariffs would help right decades of unfair trade policies. Trump told the group of executives who gathered at the White House, including representatives from Nucor Corp., AK Steel Holding Corp. and U.S. Steel Corp., that “you will have protection for the first time in a long while.”
Trump said the full plan will be announced next week. The White House would not provide any specific details, including whether some trade partners would be exempt.
But Roberts and other Republicans from the Senate Finance Committee described the penalties as a ultimately “consumer tax,” that would boomerang badly on the very rural and middle-class voters who supported his election in 2016.
Roberts worried that imposing the steep tariff could also wipe out any benefits from tax reform if higher manufacturing costs are passed on to consumers. He fears that unilateral withdrawal from NAFTA could be next on Trump’s chopping block.
“Let’s certainly hope not,” he said.
Trump also took criticism from other GOP corners on Capitol Hill.
Rep. Mark Meadows, R-N.C., chairman of the Freedom Caucus and a Trump supporter, tweeted that "manufacturing will ultimately be the loser with these protectionist policies."
Democratic Sen. Claire McCaskill, who represents a state Trump won by nearly 20 percent of the vote, said she is also concerned that Trump is starting a trade war that will punish Missouri’s manufacturing and agriculture sectors.
“What’s being proposed here will fall squarely on the shoulders of the thousands of the Missourians in manufacturing jobs, and on the thousands more farmers who may see swift retaliation by foreign countries against their goods.” McCaskill said.
While steel company stocks rose on the announcement, the Dow Jones industrial average showed less bullishness, dropping 420.22 points, or 1.68 percent, on concerns protectionist trade policies could ripple across U.S. corporations and consumers.
The Business Roundtable said the tariffs would backfire and “could embolden other countries to impose ‘national security’ tariffs on U.S. exporters.” Americans for Prosperity, a nonprofit funded by Kansas billionaires Charles and David Koch, blasted the idea as perpetuating “a harmful practice in which the government is able to hand-pick winners and losers in specific industries.”
Both Mexico and Canada have raised concerns about such tariffs as part of NAFTA negotiations. On Thursday, Canada threatened retaliation if it was subject to any restrictions.
“It is entirely inappropriate to view any trade with Canada as a national security threat to the United States. We will always stand up for Canadian workers and Canadian businesses,” said Chrystia Freeland, Canada's Minister of Foreign Affairs. “Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers.”





Some Democrats praised the deal.


Ohio Sen. Sherrod Brown, one of 10 Senate Democrats up for reelection in states that Trump won in 2016, hailed the measure and said he has repeatedly urged Trump and Commerce Secretary Wilbur Ross to provide the steel industry with some relief. He met with Trump at the White House last month to encourage him to take the move.

He said he welcomed action which is “long overdue for shuttered steel plants across Ohio and steelworkers who live in fear that their jobs will be the next victims of Chinese cheating.”
And Sen. Bob Casey, D-Penn, who is also up for reelection in another state Trump won, similarly hailed the move as long overdue.
“It has taken the administration far too long, but today’s announcement of an intention to act next week is a welcome step," he said.



California Snow Pack Coming Up Short
Associated Press
March 5, 2018 04:31
The monthly manual measurement of snow pack in the Sierra Nevada mountain range helps water regulators estimate potential runoff. ( Farm Journal )
PHILLIPS STATION, Calif. (AP) - California water officials tromped through long-awaited fresh snowdrifts in the Sierra Nevada mountains Monday, but a welcome late-winter storm still left the state with less than half the usual snow for this late point in the state's important rain and snow season.
Runoff from snow in the mountains historically provides Californians with nearly a third of their water for the whole year. Monday's snow surveys in the mountains by state water officials, with news crews in tow, is one of several closely watched gauges of how much water California cities and farms will have.
Plunging a rod into a snow drift, snow-survey chief Frank Gehrke measured 41.1 inches (104.4 centimeters) of snow Monday, almost all of it laid down by a heavy winter storm that rolled in Wednesday.
On Monday, the Phillips Station measuring location was up to 39 percent of the historical average for the date, compared to just 7 percent of its usual snow before the storm dropped up to 8 feet 2.4 meters) of snow, Gehrke said. Across the Sierra, the state was at 37 percent of normal snowfall as of Monday.
"Of course we don't know what the rest of the month is going to bring," Gehrke said. "But it is a much rosier, happier picture than it was a week ago."
California had accumulated less than a quarter of its normal snowpack for the year before last week's storm. By February, most of Southern California was back in drought, owing to a dud of a rain and snow season so far this year.
It would take six more storms to bring the state up to its normal winter precipitation by April. The odds of that happening are about one-in-50, the National Weather Service cautioned.
March is typically the last month of the rain and snow season in the state.
California emerged only last year from a historic five-year drought that forced mandatory water conservation for cities and towns, dried wells, and caused massive die-offs of trees and many other native species.
The Los Angeles-based Metropolitan Water District, the country's largest urban supplier of water, plans to vote in April on increased funding for conservation programs, spokeswoman Rebecca Kimitch said.
"One storm isn't going to ... make up for what has been a very dry few months," Kimitch said.
California's rainy season is often this kind of a cliffhanger, Daniel Swain, a climate scientist at the University of California, Los Angeles, said last month.
The state is dependent on a handful of significant storms for its water, so things can turn around quickly, he said.
California's reservoirs are at 106 percent of their historical average for this point in the year thanks to last year's rains, said Chris Orrock, a spokesman for the state Department of Water Resources.
While the heavy snows in the Sierra Nevada are the main gift from the latest storm, it helps that arid Southern California got doused as well, Orrock said.
Rain in Southern California rain means reservoirs get filled and vital below-ground natural reservoirs depleted during the drought are replenished.