While China still negotiates potential tariffs on American imports, the U.S. wheat industry hopes the country will abandon the plan. If the tariffs are implemented, U.S. wheat growers will have to look elsewhere to sell their crops.
On Apr. 4, China announced it would consider placing 25 percent tariffs on 106 U.S. products including wheat, corn, soybeans and tobacco. The threat came in response to President Donald Trump’s administration imposing 25 percent and 10 percent tariffs on steel and aluminum imports, respectively, at the end of March.
“We’re hoping our (trading) partners will seek mutual agreements and not engage in shooting wars with these tariffs,” Andy Juris, a Bickleton wheat farmer and the Yakima-Klickitat counties representative for the Washington Association of Wheat Growers, told the Yakima Herald.
Although the Chinese tariffs are still under negotiation, the U.S. wheat industry is already weighing its options.
“These tariffs will essentially make our wheat less competitive compared to our competitors’,” Glen Squires, CEO of the Washington Grain Commission (WGC) told Lens.
Squires added that the commission is hoping the ongoing negotiations on the tariffs will get sorted out and they will not be implemented.
“If they are, we will likely see our exports go down. They can just buy the wheat someplace else.”
Soft white wheat is a popular U.S. export, grown almost exclusively in the Pacific Northwest. Squires traveled to China in January and said the country’s representatives indicated they like Washington wheat for its high quality. The Chinese commonly buy the product for cakes and pastries.
Last year, China imported approximately 233,000 metric tons of white wheat from the U.S., out of the 1.6 million metric tons of wheat China purchased across different classes. China increased its purchases in the market year concluding at the end of May, importing 346,000 metric tons of American white wheat so far.
If China starts buying less wheat, the Washington wheat sector will focus its efforts elsewhere, added Squires.
“There will be less demand and that could be negative on prices, but we are spending time with other countries to try to increase our sales there,” adding that the commission is looking at spending time in Central and South America for potential replacements to Chinese importers.
“China is a market we’ve been in for a long time,” Ben Conner, Vice President of Policy for U.S. Wheat Associates, told Lens. “We’ve seen a lot of promise but also a lot of complications over the years from getting the access.”
In December 2016, the U.S. requested the World Trade Organization (WTO) investigate Chinese tariff-rate quotas (TRQ) for agricultural products.
Conner said China’s market price support for wheat was almost double the global market price, which lead to much larger production than they would otherwise have, and large government-held stocks. Because it is expensive to maintain that storage capacity, China wanted to keep out imports until the stock decreased.
The U.S. wanted China to reverse course and start having more market-oriented farmer support programs, according to Conner.
“The point of that isn’t to argue with China, but to be able to have a better relationship where we can do the market development work we’ve done in other markets, such as Japan, where we’ve been able to build a solid market for soft white wheat. We are committed to do something similar in China.”
Now, the proposed tariffs add uncertainty to that marketplace, he said.
“We are hoping these tariffs never go into place in China,” said Conner. “It has certainly already scared buyers…some have stopped buying U.S. wheat.”
He added that the wheat industry is working to prevent the tariffs.
“China is a long-term game. We are certainly not abandoning the market and are working with buyers there. We’ve always had to try to build demand to pull U.S. wheat into the system. That job will get a lot harder if the tariffs are put into place.”