WASHINGTON – US dairy farmers, one of the sectors most affected by the ongoing trade war between Washington and Beijing, are pointing out the damage they have suffered and are looking forward with trepidation to a period of prolonged economic uncertainty.
“In 2018, things were critical. We registered the closure of one in seven farms due to the impact of the tariffs,” Jaime Castaneda, the vice president of the US National Milk Producers Federation, told EFE.
Before the first round of tariffs imposed on Chinese imports by US President Donald Trump and Beijing’s tit-for-tat retaliatory measures, the Chinese market was the one that had been growing fastest for US dairy products.
Castaneda said that during the first six months of 2018, exports to China had grown by almost 20 percent compared with the previous year.
“However, as soon as the tariffs were imposed (in May 2018), dairy exports to China dropped. In the second half of the year, exports fell 32 percent, despite the fact that China was buying 10 percent more dairy products overall,” he said in an interview with EFE.
If the focus is expanded to a whole year, from July 2018 to July 2019, the impact is even worse: exports to China plunged by 42 percent.
Although the organization acknowledged Beijing’s unfair business practices in other areas – which, among other things, Trump’s trade war is aiming to halt – discontent among dairy farmers is noteworthy since they think “that it should have been done in another way.”
“We’d have liked to face these issues with other countries, like France and Spain, who have the same problems we have (with China), and not to do it alone,” he said.
Castaneda said that the policy adds complexity to the scenario in the sector, especially given that next year Trump is seeking re-election.
“We should be dealing with the issues one by one. We understand that the president has just four years here, while the Chinese president, obviously is president for life. That clearly complicates things. You end up trying to do too many things at the same time,” he said.
The main US dairy producing states are California, Wisconsin, New York, Idaho and Pennsylvania.
Of those, traditionally Democratic Wisconsin and Pennsylvania backed Trump in 2016 and were determining factors in the Republican mogul’s election victory, and support for him from the agricultural and livestock sector will be key to his re-election.
After months of denying that the tariff war would have any effects on US producers, pressure and complaints from the sector have resulted in forcing the White House to announce two multi-million dollar packages of financial aid to farmers.
“That’s not the solution, we’ve said on numerous occasions,” Castaneda said.
But beyond election considerations, he said, the basic problem is “the need to open new markets,” something that Europe is doing by negotiating agreements that “are advantageous for them” – like the one recently reached with the Mercosur trade bloc.
“We’re lagging behind by closing off these markets with trade wars,” Castaneda lamented.
After being the big driver for free trade worldwide, it is surprising that at present the US is the defender of protectionism and that it has launched a tariff war.
Castaneda said that during the Barack Obama administration (2009-2017), there was no big push to open markets and nobody had spoken clearly about “free trade” since the previous administration of George W. Bush (2001-2009).
“But it’s true that the extreme positions of this government had not (yet) been seen,” he said, referring to Trump, who came into the White House with an aggressive agenda of economic nationalism.
However, the president does not seem inclined to back down and he has already announced the raising of tariffs on hundreds of other Chinese products, the latest round coming in late August, promising yet another series of tariff hikes in December according to which the entire gamut of Chinese-made products will be subject to heavy tariffs.
Beijing, once again, has replied with similar measures and redoubled its pressure on the battered US dairy sector.