“2018 was critical, we recorded the closure of one in seven farms because of the impact of tariffs,” Jaime Castaneda, vice president of the National Federation of U.S. Dairy Producers told EFE.
U.S. farmers, one of the sectors most affected by the trade war between Washington and Beijing, noted the damage suffered and face with fear the prolonged economic uncertainty.
Before the first round of tariffs imposed by President Donald Trump on Chinese imports and Beijing’s reciprocal response, the Chinese market was the fastest-growing market for the U.S. dairy sector.
Castaneda explained that during the first six months of 2018 exports to China had risen by almost 20% over the previous year.
“However, as soon as tariffs were applied (in May 2018), dairy exports to China were reduced. In the second half of the year, exports fell by 32%, despite the fact that China was buying 10% more dairy in total,” remarked the expert in an interview with Efe.
If the focus is extended to the whole year, from July 2018 to July 2019, the impact is even more damaging: exports to China fell by 42 %.
Although the guild acknowledges Beijing’s unfair trade practices, the discontent of farmers is remarkable as they believe “it should have been done differently”.
“We would have liked to address these issues with other countries, such as France or Spain, which have the same problems we have (with China), and not do it ourselves alone,” he stresses.
For the expert, politics adds complexity to the panorama, especially when next year there are elections in which Trump will seek re-election.
“We should face the issues one by one, we understand that the president here is only four years old, while the president of China, obviously, is president for life. That clearly complicates things, you end up trying to do too many things at once,” he insists.
The top dairy producing states in the country are California, Wisconsin, New York, Idaho and Pennsylvania.
Out of these, Wisconsin and Pennsylvania, traditionally Democrats and supporters of Trump in 2016, were instrumental in the Republican’s victory, so the support of the agricultural and livestock sectors will be critical to his re-election.
After months of denying that the tariff war would have an effect on U.S. producers, pressure and complaints from the sector forced the White House to announce two billion-dollar financial aid packages.
“They’re not the solution, we’ve said it many times,” he says.
Beyond electoral considerations, Castaneda argued, the underlying 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 Mercosur”.
“We are lagging behind in closing these markets with trade wars,” he laments.
After having been the great promoter of the free market at a global level, it is surprising that the United States is now the defender of protectionism and has launched a tariff war.
For Castaneda, during the administration of Democrat Barack Obama (2009-2017), Trump’s predecessor, there was no great push to open markets and there has been no “clear talk of free trade” since George W. Bush’s predecessor (2001-2009).
“But it is true that the extreme positions of the current government had not been seen,” he said regarding Trump, who came to the White House with an aggressive agenda of economic nationalism.
The president does not seem, however, inclined to give in and has already announced the increase in tariffs on hundreds of products from China, the last one at the end of August, and has promised a new round in December, so that all Chinese imports would be subject to new taxes.
Beijing, once again, has replicated with similar measures and thus doubled the pressure on the battered US countryside.