US soy farmers and industry on Tuesday urged President Donald Trump to pull back from his tariff threat and quickly bring an end to the trade dispute with China.
That message was reinforced by financial markets, as US stocks fell by more than two percent for the first time in months amid concerns the renewed trade tensions could scuttle a deal.
Trump has vowed to more than double the tariffs on $200 billion in Chinese goods starting Friday, after US negotiators accused Beijing of reneging on commitments made during months of talks that aim to reduce the US trade deficit, clamp down on theft of US technology and reduce China’s massive subsidies.
American soy farmers have found themselves in the crosshairs of Chinese retaliation, and prolonging the battle will be even more damaging, Davie Stephens president of the American Soybean Association (ASA), said in a statement.
Stephens, a grower from Clinton, Kentucky, said “farmers are in a desperate situation. We need a positive resolution of this ongoing tariff dispute, not further escalation of tensions.”
China is a key market for US soy bean exports, but last year sales plunged by about 75 percent compared to 2017 to just over $3 billion, after China retaliated against US farmers with 25 percent tariffs.
Stephens said prices already are depressed, so “we need the China market reopened to US soybean exports within weeks, not months or longer,” and before the 2019 harvest begins in September.
“The financial and emotional toll on US soybean farmers cannot be ignored.”
The chemical industry is facing similar difficulties, and also called for the White House to work fast.
“The risks of continuing to use tariffs as a negotiating tactic with China are simply too high — and any potential benefits still unclear,” American Chemistry Council President Cal Dooley said in a statement.
“China supplies the United States with several chemicals which are not available anywhere else and which are critical inputs to US manufacturing,” he said, noting that China is also is the number three US export market.
Talks will go on
Despite the tougher US rhetoric, China said Tuesday its top trade negotiator, Vice Premier Liu He, would lead Beijing’s delegation to the talks in Washington on Thursday and Friday, a day later than originally scheduled.
“China always believes that mutual respect, equality and mutual benefit are the premise and the basis for reaching an agreement. Adding tariffs will not solve any problem,” Chinese Foreign Ministry spokesman Geng Shuang said at a regular media briefing.
Trump’s new tariff announcements have tanked stock markets worldwide as investors, like worried US farmers and businesses, had been banking on a resolution to the year-long conflict that has engulfed $360 billion in two-way trade.
Markets slumped even further on Tuesday, and Wall Street, which had been less pessimistic, fell more than two percent in afternoon trading.
US officials say the world’s two largest economies had been close to an agreement but they claim Beijing reversed course in recent days.
“Over the course of the last week or so, we’ve seen an erosion in commitments by China, I would say, retreating from commitments that have already been made in our judgment,” US Trade Representative Robert Lighthizer was quoted as saying in media reports on Monday.
He said the tariffs would increase at 12:01 am (0401 GMT) on Friday.
Treasury Secretary Steven Mnuchin described the negotiations as 90 percent complete but told reporters that in recent days the talks had gone “substantially backward,” according to the media reports.
Trump vowed Sunday to ratchet up existing tariffs this week and also to extend the 25 percent punitive duties to the remaining $350 billion in Chinese goods imported into the country each year.
The tensions have renewed fears that the trade war could spill over into the global economy.
Speaking in Paris, International Monetary Fund chief Christine Lagarde said “tensions between the United States and China are the threat for the world economy.”
Oxford Economics warned that escalating the tariffs to the remaining Chinese goods, which would be expected to spark further retaliation from Beijing, would cut 0.3 percentage points off US growth.
But William Reinsch, a trade policy expert at the Center for Strategic and International Studies, cautioned that China will never meet all the US demands, which complicates Trump’s strategy.
“The most important things are the things the Chinese won’t give,” he told AFP, including reducing subsidies and subjecting state-owned enterprises to market forces.
“The Chinese are not going to do either of those things,” so “the path to political victory for him is a narrow one,” he said.