Tariffs Causing Problems for U.S. Trade

Long-Term Problems May Be Ahead

By Jessica Theisman, Associate Editor

If a market is lost, it takes time to get it back. California Ag Today recently spoke with Brian Kuehl, executive director of Farmers for Free Trade, about the topic. A concern is that competitors are entering the markets that we currently occupy.

“No farmers invest huge amounts of time and energy trying to open markets or trying to develop trade relationships, and they’re being torn up in a matter of months,” Kuehl said.

Tariffs will cause long-term problems. One major issue is that when tariffs are established, other countries will begin put to put tariffs on our food. Those countries then begin to plant more crops to adjust. Soon, those countries become their own producers instead of relying on the U.S. Those countries then look to other countries that are more dependable, which in turn becomes a competitor to the United States.

The renewal of NAFTA will help.

“If this is not resolved soon, we certainly are doing lasting damage to agriculture. It could trigger the next farm crisis,” Kuehl said.

It looks like the U.S. is moving toward a deal with Mexico on a renewal of NAFTA.

“Hopefully that would quickly lead to a deal with Canada,” Kuehl explained. Mexico and Canada are our biggest trading partners.

For many of our products, China is one our largest trading partners, and certainly one of the ones that is growing the fastest in terms of population.

“We do not want to squeeze ourselves out of the Chinese market for a decade to come; that that would be a colossal error,” Kuehl said.

The U.S. has routed products in the past. Some countries including Vietnam and Hong Kong route products into China.

“There might be a tariff on product going into China directly, but we know some of our growers are able to avoid the product that tariff by selling first to Vietnam and then Vietnam shifts into China,” Kuehl said. That same tactic with Hong Kong is being shut down. China is getting much smarter at saying you can not circumvent our tariff, so we are going to hold you to these tariff rates.”

 

California and Mexico – a win-win relationship

By: Karen Ross, California Agriculture Secretary

It speaks volumes that during our meetings in Mexico, the notion of “ganar-ganar,” or a “win-win” relationship was mentioned more than once. Our discussions have focused not only on building stronger trade relationships between our two markets, but in also in capitalizing on the shared resources of our people, climate and economy. A strong and growing Mexican market is a win for California and a win for Mexico.

In our meeting with Mexico’s Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food  we discussed the great opportunities for cooperation between our two markets that can have long lasting benefits for both of our economies. Working collaboratively to solve cross-border trade delays that impact businesses on both sides of the border is an issue that can be resolved. Further, we wish to explore opportunities that jointly leverage our resources and production capacity.

We can no longer consider a California/Mexico divide. We need to see how cooperation can benefit us both in the long-run. I’ve committed to SAGARPA that within the next 60 days we will have progress in moving forward with a collaborative relationship that involves the public and business sectors finding solutions to cross-border issues that benefit both markets and producers.

Following our meetings with SAGARPA we had the pleasure of meeting with Walmart Mexico and Central America. The company also stressed cooperation and a “win-win” relationship that California and Mexico can share.

In celebrating the successes of the 20th Anniversary of the North American Free Trade Agreement (NAFTA), we should also celebrate the ongoing trade benefits of this relationship. Demonstrating this success, Walmart shared that their imports of U.S. produce has increased more than 10 percent each year for the last three years. This underscores that Mexico’s economy is growing and California is benefiting.

I look forward to furthering our trade relationship and cooperation with Mexico. It can be a “win-win” relationship like no other.