Trump boast ignores reality of trade war as US farmers feel pain
- Lost exports of beef, pork and other produce to China are far from being sufficiently offset through pacts struck with Japan and other governments
Americans need to ask whether President Donald Trump’s trade negotiations are in the name of their country’s economic well-being or his re-election bid. The manner in which tariff negotiations are being conducted raises doubts.
A deal reached last week with Japanese Prime Minister Shinzo Abe was focused on farmers, a core part of his support base. The problem is that lost exports of beef, pork and other produce to China are far from being sufficiently offset through pacts struck with Japan and other governments.
Trump touts himself as the ultimate deal maker and his trade war with China is claimed to be proof of bargaining skills. But while he has dented Chinese growth, he has also damaged his country’s exports through the tit-for-tat tariffs that Beijing has imposed.
As a result, US farm exports are down 7 per cent so far this year, amounting to a loss in sales to China alone of US$7.7 billion. Farmers, who helped elect Trump in 2016, and are crucial to his winning a second term next year, are not satisfied with the bailout payments they are receiving to compensate for lost business; China is by far their biggest market and they are eager for an agreement to be quickly struck.
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Negotiations between China and the United States are expected to resume next week. But Beijing is in no hurry to forge a deal and the one struck between the US and Japan on September 25 is good reason for not rushing.
Under the bilateral trade pact, Japan has committed to immediately lowering tariffs on US beef and pork imports to levels set for the 11 members of the Trans-Pacific Partnership free-trade arrangement, which the US withdrew from in 2017.
American penalties on Japanese vehicles and parts are the biggest block to trade relations, but there was no agreement on their removal, the accord instead referring to their elimination in future talks without specifying a time frame.
Abe declared the deal was “win-win”, but the benefits for Japan are not apparent. Japanese cars and parts account for 35 per cent of the country’s trade with the US. The Trump administration is still considering additional tariffs on auto imports from Japan on national security grounds.
Separate to the trade talks, Japanese companies have agreed to import American corn that had previously been destined for China.
The deal with Japan will restore a chunk of the business American farmers lost when the US left the partnership. But their decades of effort cultivating the Chinese market, which dwarfs all others, has severely hurt exports, particularly for soybeans.
Trump’s social media comment marking the 70th anniversary of the People’s Republic, “We are winning, and we will win” followed by the jibe, “Happy birthday China!” ignored reality.
