Members of the American agricultural industry are voicing their concerns over the President’s latest actions.
President Trump announced his intentions to impose 25 per cent tariffs on steel imports and 10 per cent tariffs on aluminum imports during a meeting with representatives from the U.S. steel and aluminum industries yesterday.
“We’re going to build out steel industry back and we’re going to build our aluminum industry back,” he said during the meeting.
But the implementation of tariffs could have ripple effects on the American agricultural industry.
Canada exported CAD$9.3 billion worth of aluminum and CAD$5.5 billion worth of steel to the U.S. last year.
Those resources are vital in agricultural equipment manufacturing. If the prices for those commodities rise, farmers could feel it the most.
“Any action that drives up the price of steel is likely to have a quick impact on the cost of the farm implements our members manufacture in the U.S.,” Vernon Schmidt, executive vice president of the Farm Equipment Manufacturers Association, told Farms.com in an email today.
“Dealers have very little implement inventory on hand and manufacturers, who have done their best to hold the line on farm implement prices, will have to pass any increase in costs on to the end users.”
Canada would like an exemption to the tariffs and would take “responsive measures” on the U.S. if the tariffs are imposed, Chrystia Freeland, Canada’s foreign minister, said in a statement yesterday.
Implementing those tariffs could also start a trade war with China, the top export market for U.S. soybeans.
“Half of U.S. soybean exports go to China. If China hits back on soybeans, it’s really going to hurt,” Haiyan Wang, a professor at the INSEAD business school in Washington D.C., told CNBC yesterday.
U.S. soybean exports to China totaled about $14 billion last year, which was more than America’s other soybean customers combined, according to the American Soybean Association (ASA).
Losing China would be extremely painful for U.S. soybean growers.
Commodity “prices are down 40 percent and farm income is down 50 percent, and we simply can’t afford for those numbers to get worse,” John Heisdorffer, ASA president, said in a statement yesterday. “Our competitors in Brazil and Argentina are all too happy to pick up supplying the Chinese market.”
China is already considering limits on U.S. sorghum imports in response to tariffs President Trump placed on solar panel and washing machine imports.
U.S. dairy farmers are also concerned tariffs on steel and aluminum imports will harm their sector.
“A trade war with major trading partners will not be good for the U.S. and will likely mean less dairy sales for our dairy farmers,” Edge Dairy Farmer Cooperative said in a statement today. “That would be a tragic loss at the worst possible time as farmers struggle to make ends meet.”
By: Diego Flammini