The split between lawmakers and farmers over President Donald Trump’s trade war with China and the results of a “phase one” deal was highlighted Wednesday at a hearing on Capitol Hill.
While Republican lawmakers at the House Ways and Means Committee hearing played down the economic impact of the trade war and lauded the recent pact with China a major success, Democrats stressed the fact that tariffs continue to restrict trade.
Rep. Jason Smith, R-Mo., called the trade pact and China’s promise to ramp up ag imports from the U.S. “a big win for farmers,” but Chairman Richard Neal, D-Mass., doubted the purchases would happen and warned that “the only strategy the president seems to have is a promise of more bailouts for farmers.”
The Trump administration allocated $28 billion to trade assistance packages over the last two years with the bulk of the funds going to direct payments under the Market Facilitation Program. Trump announced last week in a tweet that he was prepared to hand out a new round of payments, but Ag Secretary Sonny Perdue continues to stress that they will not likely be needed.
Both sides readily admitted that Trump’s import taxes and China’s retaliatory tariffs hurt the U.S. ag sector. While some were optimistic the damage will soon be rectified by China’s promise to buy $80 billion worth of U.S. farm goods over two years, others were not convinced and warned that billions more dollars in government assistance may be needed to blunt the damage from the continued loss of exports.
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“As far as the 'phase one' deal goes, the purchases, which have not yet materialized, are a promise while the tariffs are real,” said Minnesota wheat and soybean farmer Tim Dufault, who was one of several witnesses at the Wednesday. “Farm income is being propped up by government Market Facilitation (Program) payments that are not a substitute for markets and trade. And commodity prices, which have plummeted since the trade war began, have actually fallen further after the U.S.-China 'phase one' deal."
A witness favored by GOP lawmakers at the hearing was Illinois Farm Bureau President Richard Guebert, who offered a rosier picture of the situation with China.
“The agreement’s provision calling for China to purchase roughly $40 billion worth of U.S. agricultural and seafood products in each of the next two years will provide a huge and timely economic lift to American agriculture,” Guebert said. “We certainly know the markets have yet to move. But farmers are optimistic. We understand that we’re just at the beginning of an exciting new chapter and we patiently await the benefits of this new trade agreement.”
Guebert acknowledged that China is having a difficult time importing the commodities it needs because of the coronavirus outbreak. Perdue, who spoke at a separate event at USDA's Washington headquarters, said the outbreak was indeed slowing down trade, but also emphasized that he believed China would still fulfill its purchase commitments.
Dufault is more skeptical. “The ag economy doesn’t live on promises,” he said at the hearing. “Until China buys, we are not buying the promise.”
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