The Trump administration says it has an extensive contingency plan to protect the agricultural industry from the effects of a trade war. And the agricultural industry has no idea what that plan is.
For months, the White House has promised it would protect farmers should China, Mexico, Canada, and other U.S. trading partners impose tariffs of their own but has refused to divulge its strategy. Agriculture industry officials say they have been left in the dark just as much as anyone else.
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“The administration has said that they do intend to help farmers but as far as what that help may look like, it is unclear,” said Wendy Brannen, director of communications for the American Soybean Association, told the Washington Examiner. “We don’t have any inside track.”
The soybean farmers probably would have some thoughts on the matter if the administration did ask. The industry is directly in the crosshairs of the dispute between the U.S. and China. On July 6, China is scheduled to implement 25 percent tariffs on $34 billion worth of U.S. goods including soybeans, pork and chicken, among other items.
China is the U.S.’ largest buyer of soybean exports and second-largest buyer of U.S. agricultural products overall. Even without China’s tariffs in effect, the industry has suffered as potential buyers look to other sources, such as Brazil. Bushel prices, which had exceeded $10.50 as recently as April, have slid to $8.60 as of this week in anticipation of the tariffs.
Others are feeling the pinch as well following a mid-June shoving match between the U.S. and China that had the White House first announcing $50 billion in new tariffs, then another $200 billion and then China promising retaliation. Corn futures fell to their lowest level of the year last week at $3.75 a bushel, down 51 cents from its height in late May. Cotton fell to 83 cents a pound, down 12 percent in a month.
Agriculture Secretary Sonny Perdue has repeatedly vowed the USDA would step in. He told the Washington Examiner in April that the department was “looking for other markets” besides China, Canada, and Mexico as buyers of U.S. products. “When you have challenges just with your top three customers, that puts a lot of pressure on our sales force and our negotiating team to go around the world and find a place for these products.” He declined to elaborate on those efforts, however.
That was still Perdue’s stance in a Tuesday op-ed for USA Today in which he said his department has “tools at our disposal to support farmers faced with losses,” but added, “We have not unveiled our strategy, as it is not good practice to open our playbook while the opposing team is watching.”
Those tools involve a $30 billion line of credit for the USDA secretary from the Treasury Department, said Dale Moore, vice president for public policy at the American Farm Bureau Federation, the umbrella group for industry.
“USDA is probably unique among the Cabinet offices in effectively having direct access to Treasury through the Commodity Credit Borrowing Authority,” said Moore, a former USDA official during the Bush administration. “The secretary has a lot of discretion in how he can approach that.”
The administration has been a model of discretion, too, not asking key players in the industry for any input. “We haven’t heard of any details … The USA Today op-ed is the first that we are hearing of a contingency plan,” said Caitlin Eannello, director of communications for the National Wheat Growers Association.
No other agricultural industry group contacted by the Washington Examiner reported that anyone from the administration had reached out to them, either. Moore said he expected the administration would do that “at some point,” but for now the industry is hoping that the U.S. and China can be talked back from the brink. “We’d much rather have trade to tariffs,” he said.
Others, speaking off the record, echoed that point, arguing there was still time for the parties to cool off ahead of the July 6 implementation date. No one wants to talk about mitigation “yet,” said one industry source, because doing so would be conceding that the tariffs cannot be prevented.
