(Bloomberg) -- Agriculture Secretary Sonny Perdue wants China to be a customer of American farm products, even after Washington hiked tariffs on more than $200 billion in Chinese goods, and said retaliation by Beijing would prompt the U.S. to boost support to its farmers.
“Our biggest goal will be for China not to retaliate and stay at the table to negotiate a good deal,” Perdue told Bloomberg News on Sunday, adding the U.S. will respond if China retaliates.
President Donald Trump said on Friday the U.S. will boost its purchases of domestic farm products for humanitarian aid in an effort to offset lost demand from China as trade tensions flare.
Perdue said he is working carefully on a plan and will submit it to the president within “a few days to a couple of weeks."
Trump said on Twitter the U.S. will use money coming in from the tariffs to buy American agricultural products “in larger amounts than China ever did” and send it to “poor & starving countries” for humanitarian aid. The president indicated potential purchases of $15 billion from farmers.
Perdue said the implementation of the program will take time, as the U.S. has a large stockpile of grain and oilseed. The U.S. Department of Agriculture released its closely watched monthly crop outlook on Friday, issuing the first guidance on supply and demand for the upcoming season, and forecast rising domestic stockpiles.
Soybeans posted their biggest weekly loss in more than eight months in the week through May 10 as the USDA report exceeded analysts’ estimates for oilseed stocks. Corn also slumped as U.S. inventories were projected to swell to the most since the 1987-1988 season.
“I cannot say for sure right now when purchases of those kinds of products will take place,” Perdue said. “We have to look at the seasonality of all the crops across the spectrum and agree on which are hurt and damaged by China’s decisions.”
Perdue was in Niigata city in northern Japan to attend the Group of 20 farm ministers’ meeting. Japan, as the host of the gathering, urged other nations to lift restrictions on Japanese food imposed after the 2011 Fukushima nuclear disaster, as Prime Minister Shinzo Abe’s cabinet aims to boost agricultural exports to support rural communities. They also discussed ways to enhance agricultural productivity and the use of information technology for efficiency.
Trump said on Saturday it would be wise for China to “act now” to finish a trade deal with the U.S., predicting that “far worse” terms would be on offer after what he predicted would be his certain re-election in 2020.
U.S. Trade Representative Robert Lighthizer said the administration would on Monday release details of its plans for tariffs on an extra $300 billion of imports from China, setting the process in motion for Trump to deliver on his threat to hammer all Chinese trade.
The U.S. hiked tariffs on more than $200 billion in goods from China on Friday in the most dramatic step yet of Trump’s push to extract trade concessions, deepening a conflict that has roiled financial markets and cast a shadow over the global economy.
China immediately said in a statement it will be forced to retaliate, but didn’t specify how. The moves came as discussions between President Xi Jinping’s top trade envoy and his U.S. counterparts in Washington made little progress.
In 2018, the U.S. administration said it would deliver as much as $12 billion to farmers after Beijing slapped retaliatory tariffs on U.S. agricultural products. Last month, the World Trade Organization ruled that China didn’t follow proper procedures when it imposed trade restrictions on farm imports.
The U.S. government bought supplies from farmers in the 1980s after President Jimmy Carter’s ban on grain exports to the Soviet Union sent prices tumbling. The purchases were through the Commodity Credit Corporation -- an entity established in 1933 to stabilize, support and protect farm income as well as prices. Corn and wheat stockpiles wound up climbing to a record in the mid-80s.
American farmers are struggling to keep afloat after the tariff spat that started a year ago curbed soybean exports to top buyer China, sending prices tumbling and hurting grower incomes. A gauge of returns from grain futures is trading near its lowest since 1977 and farmer bankruptcies in six Midwest states rose 30% in 2018, according to the Federal Reserve Bank of Minneapolis.
©2019 Bloomberg L.P.