by Owen Klinsky
In an exclusive interview with the Daily Caller News Foundation on Wednesday, California Republican John Duarte (R-CA-13) revealed his plan to save American farmers from possible financial ruin from long-term Chinese tariffs.
China has imposed retaliatory tariffs on a slew of U.S. agricultural products over a 12-year period trade war escalation with the Trump administration in 2018, resulting in falling exports to that country and a glut of American inventories that weighed on domestic commodity prices. Now Duarte – a fourth generation farmer who is one of the most significant in the country productive agricultural regions — intends to bring U.S. growers back from the brink of bankruptcy through a roughly $6 billion subsidy program amid continuing knock-on effects from China’s economic blockade.
“[Following the retaliatory tariffs] farmers began to accumulate enormous stocks of products that were not sent abroad,” Duarte explained to the DCNF. “This was initially met by the Trump administration’s initial market facilitation program, which allocated approximately $23 billion to farmers to offset some of the retaliatory effects [agricultural] tariffs as part of the overall trade war that has taken place.”
In July 2018, China introduced tariffs on agricultural products worth approximately $22.5 billion retaliation for tariffs downloaded by former President Donald Trump regarding steel and aluminum wa offer urging China to crack down on intellectual property theft. Trump then launched a “market facilitation program.” distributed $23 billion in 2018 and 2019 to address farmer losses.
“To some extent, [the market facilitation program] it was great in the tiny term, but it made the industry unresponsive to market conditions for another year or two, so production capacity remained stagnant,” Duarte (pictured) continued. “Farmers continued to produce and stocks became more abundant as the pain of the initial effects of the trade was not felt. Currently, inventories are high and commodity prices are falling, forcing farmers to borrow against their property and businesses during a period of elevated interest rates, which has led to the highest-ever farmer debt.”
Net farm income is projected to decline by nearly 40 percent this year compared to 2022 levels, and farm operating debt is projected to enhance by about 15 percent year-over-year in the first quarter of 2024, according to an American Farm Bureau economist Federation Samantha Ayoub he said Michigan Farm News in August. The deterioration of the financial situation of farmers is similar to that of global supply chains customized to a decline in Ukrainian exports, which causes a decline in the prices of many agricultural goods Coolwith average nominal corn and soybean prices in February at their second and fourth lowest levels since 2006, respectively, on an inflation-adjusted basis.
Duarte has seen many of his personal friends pushed to the brink of bankruptcy by current stressors such as low commodity pricesraised interest rates AND inflated fertilizer costs, including a farmer and a former California assemblyman Bill Berryhill.
“Bill Berryhill is a top-notch farmer. It is innovative. He adopted technology. For generations, he has mentored other farmers to be more productive, understand the market and make the right decisions. Even he and his family are in the last year of their lives,” Duarte told DCNF. “I met with bankers and the best farmers in my entire community. People who don’t buy vacation homes or luxury planes. Farmers who invest in their activities, introduce innovations, spend time talking and learning from each other. It has become structurally impossible to sustain the current inflation and commodity prices, which is what we are collectively hearing from the banks.”
Duarte, however, believes he can avert an economic disaster for American farmers, telling DCNF that he wants farmers to continue to export goods to China at competitive prices, with Commodity Credit Corporation (CCC) – a government-owned corporation that provides financing to support the U.S. agricultural sector – paying up to a quarter of the cost of tariffs to make it financially feasible. He argues that such a move would enable farmers to get rid of excess supplies, thereby raising commodity prices.
“What I think is at hand for [Biden-Harris] the administration must allocate approximately $6-7 billion from the CCC to retaliate against market facilitation [agriculture] tariff addition and essentially makes up up to 25 percent of the value of the retaliatory tariffs that affect farmers outside China.”
The congressman also hopes the subsidy program will lend a hand prevent countries like Brazil and Australia from strengthening their agricultural industries and taking away market share from the U.S. in the coming years.
“China wants to replace American agricultural goods where it has good alternatives,” Duarte told DCNF. “We are seeing other countries, namely Australia and Brazil, scaling up their agricultural industries to fill the gap [left by the decline in U.S. exports]. These capital investments will be quite static, which means that in the future we will have to compete with these countries, so even if prices or retaliation [agricultural] tariffs are eliminated, we will still have to compete with well-capitalized, established players that we may not have faced if tariffs had not disadvantaged us over the last seven or eight years.”
Brazil saw its subsidized soybean exports to China enhance by nearly $4 billion in 2018, the year the tariffs were imposed, According to to a January 2022 report by the U.S. Department of Agriculture. Meanwhile, U.S. cotton exports to China fell by $400 million, and the study found that the gap was being filled by competing exporters such as Brazil and Australia.
“There are many criticisms of China ever being admitted to the World Trade Organization (WTO). We had this happy feeling that if we enriched them, they would demand freedom and create a freer society,” Duarte told DCNF. “Things didn’t work out that way, so we spent five years fighting China in court and won the case. They were then ordered to stop retaliating [agriculture] customs duties in the courts of the World Trade Organization and they did not do so.
WTO ruled August 16, 2023 that China retaliates tariffs were “inconsistent” with international trade rules, but the country refused to deviate from this policy. Some analysis of the Economic Policy Institute found that the U.S. trade deficit led to the loss of 3.7 million American jobs between 2001 – the year China joined the WTO – and 2018.
“First of all, China should not have been allowed into the WTO because since then it has been manipulating world trade, currencies and access to its markets in every possible way,” Duarte told DCNF. “Now American policymakers must take off the gloves.”
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Owen Klinsky is a reporter at the Daily Caller News Foundation.
Photo “Texas Farmer” by Southeastern Legal Foundation.
