Farmer Patience Dwindles As China Trade Talks March On

May 8, 2019 02:44 PM
While the countries continue to sort out differences and the U.S. strives to keep the Chinese accountable to their previous agreements, farmers are losing patience.

Despite the snag earlier in the week, it appears the U.S. and China will continue trade talks over the next few days. While the countries continue to sort out differences and the U.S. strives to keep the Chinese accountable to their previous agreements, farmers are losing patience.

On Sunday, President Trump Tweeted that he would increase tariffs on Chinese goods come Friday if an agreement isn’t reached before then. In fact, Tuesday Robert Lighthizer filed the tariff increases, according to the federal register. There’s more clarity now on what caused those actions, Chinese officials removed previously agreed upon commitments in every chapter of the deal. Farmer fatigue is mounting. 

“It’s hard to be, but, still be patient,” Tony Melanson, a farmer from Wisconsin, told Chip Flory on AgriTalk. “My first thought when I saw President Trump's tweet on Sunday was that it was him making the tariff threats to maybe get the last one or two things he wanted out of the Chinese.”

Because the news is reporting the Chinese backtracked on their agreements, Melanson says Trump’s actions make more sense. 

“You can't go back on something you already said ‘yes’ to. So, I understand the frustration there,” he said. “And although I'm still patient, my patience is really, really wearing thin right now.”

Indiana farmer Don Lamb says he was frustrated with the initial tweets and doesn’t like the additional tariffs coming on, but he says it’s just like the Chinese to change the rules midstream.  

“In the big picture, that's probably more what we're fighting than the details—the fact that you've got to stick to your word on things that are probably bigger than even agriculture,” he said. “Those are the real issues, but we in agriculture are paying the price in trying to get those issues solved.”

The Long Road Ahead

Unfortunately, a completed agreement is just the beginning of a much longer process, according to John Gilliand of Gilliland and McKinney international counselors. While policy watchers for weeks have said the “end zone” is near and a completed agreement this summer is a possibility, but it isn’t the end. 

“When they say, ‘we're in the end game,’ they're talking about that agreement but that agreement is going to consist [of a] a framework of commitments that China is going to make,” Gilliand explained to AgriTalk host Chip Flory. “It will provide a roadmap for how the U.S. will undo with tariffs and a roadmap for how China will treat our goods.”

The process that follows is an even longer road than that, he said, involving China following through on its commitment and what action the U.S. would take if Chinese commitments fall through.  

“That's the road that will that will unfold over a longer period of time,” he said.

On the bright side, Gilliand doesn’t think this week’s snags will divert the U.S. from the negotiating path much. 

“They will continue to talk and there's still the possibility that the heads of state will meet,” he said. “There was an expectation as we reached the stage of some sort of agreement that Trump and Xi would meet, perhaps in early June. If they're able to get back on the path of progress there's no reason to think that agreement and the summit meeting can't still take place. But obviously, there's higher anxiety and there's more uncertainty over whether that can happen based on what where things stand now.”

The Wrong Path 

This week Senator Chuck Schumer from New York comes encouraged farmers “stick with it” and “stay tough.” Still, despite progress made some Democratic leaders, including former senator Heidi Heitkamp, say the President’s approach was the wrong one. 

“It didn't change my attitude. I think Chuck Schumer and the president are wrong. I don't think tariffs [are] the way to fight this fight,” she told Chip Flory. “A lot of economists over the years have agreed with me.”

She said Schumer is wrong to support a tariff policy because it will “only hurt farmers and will only hurt small businesses.”

A bilateral approach will not change China’s behavior, she added.  

“To back out of TPP was exactly the wrong direction. And to continue to believe you can go it alone to change China's behavior is short-term thinking,” she said. “It's not just the United States of America that suffers from access to markets and entry barriers in China, and theft of intellectual property. It's the entire group of liberal democracies who are trying to play by the rules.”

Using the market power of all those effected to push back against China would be more affective, she said. 

In the end, farmers don’t care what the strategy is. They just want their nightmare to end. 

“We just need to get we need to get this trade deal done,” Melanson said. “And we need to need to get others done too.”


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Spell Check

Montfort, WI
5/8/2019 04:54 PM

  At this juncture it pointless to keep politicizing what could or should be done. From a technical analysis, I believe $7.80-90 will provide good support in the nearby contract. Yes that $.50 away but the market will take the price to a point that will create the most pain. This is the price that I would consider being long futures as we have an entire growing season to establish price discovery. I do believe that by fall too much rain( if it continues) will lead to below trendline yields. Beans don't like wet feet and there are millions of acres with compaction issues from last fall. If we get a deal before August, we have a chance to at least create enough exports to stop the bleeding. We need to try to stay positive and hope this gets resolved somehow. We are all in this together.

Charles Hiigli
Union Mills , IN
5/8/2019 03:45 PM

  When you vote in a psychopath, you get psychotic behavior. Americans will pay for this presidency for a long time.

Jonesboro, AR
5/8/2019 04:20 PM

  It's great to have a president who will stand up to the communists for a change. Bush and Osama sit around with their thumbs up their a$$es for 16 years. China will learn there is a new sheriff in town or their economy will circle the bowl. By the way, who gives a crap about what Heidi Heitkamp says. She had her chance up there and did nothing as far as I know.