Pulling out of TPP, renegotiating NAFTA and threats to trade with South Korea weigh on ranchers.
Carol Ryan Dumas/Capital Press
SUN VALLEY, Idaho — Foreign markets are important for U.S. beef, and ranchers are understandably concerned with President Donald Trump’s trade agenda.
Since coming into office, he has pulled the U.S. out of the Trans-Pacific Partnership and has threatened to do the same with the North American Free Trade Agreement and the U.S.-Korea Free Trade Agreement.
Representatives of USDA Foreign Agricultural Service seemed to do little to calm ranchers concerns during the Idaho Cattle Association annual convention. They did, however, confirm the importance of exports and assured them USDA is in their corner.
U.S. agricultural exports were more than $140 billion in 2016, representing more than 20 percent of farmers’ and ranchers’ income, said Jeff Jones, FAS senior policy adviser.
USDA Secretary Sonny Perdue is firmly committed to opening markets, maintaining markets and enforcing trade agreements, he said.
The mission of FAS is to promote, maintain and expand markets overseas, and the agency works hard to do that, he said.
It works closely with agricultural industries to “tackle the challenges we face in markets around the world,” he said.
For the beef industry, that effort translated into $6.4 billion — 11 percent of U.S. production — in exports in 2016, he said.
With U.S. beef production forecast to hit a record high in 2018, up 5 percent from 2017, there will be downward pressure on prices, said Ryan Bedford, FAS livestock analyst.
“Exports will play a critical role,” he said.
Beef production is also forecast to increase for Australia and Brazil, with exports expected to grow 5 percent and 4 percent, respectively, he said.
Pulling out of trade agreements will raise tariffs on U.S. beef and make it less competitive, Jones said.
Beef trade under NAFTA exploded, but Trump felt it wasn’t working for the U.S. overall, primarily in the automobile and manufacturing sectors, he said.
USDA is optimistic agriculture won’t be negatively affected in NAFTA renegotiations but if the agreement goes away, tariffs on U.S. beef will go to 26.5 percent in Canada and 20-25 percent in Mexico. The U.S. tariff on imported beef will go to 26.4 percent, he said.
Trump also believes the U.S. agreement with South Korea has not been beneficial to the U.S. automobile and steel industries. The agreement went into force in 2012 and is being reviewed, he said.
South Korea is the fifth largest market for U.S. agriculture and the second largest market for U.S. beef. It imported $1.1 billion in U.S. beef in 2016, and exports are up 11 percent in 2017. The current 24 percent tariff is set to eventually decrease to zero but would go to 40 percent without the agreement, he said.
If the U.S. pulls out, “many competitors would have a tariff advantage,” he said.
The same competitive disadvantage looms with the Trans-Pacific Partnership. Trump felt there were significant problems with TPP, again outside agriculture, he said.
Japan’s current tariff of 38.5 percent on beef would go to 9 percent under TPP over 15 years. The other 11 countries are moving ahead with the agreement with the goal of having it go into force in 2019.
If TPP goes into force without the U.S., the tariff will go down for all the countries, and the U.S. will be at a disadvantage, he said.
“It’s important for us to stay competitive,” he said.
Beef used to be a luxury item in Japan and not really affordable, but it’s become affordable, he said.
Japan is the largest market for U.S. beef, and the U.S. share has grown steadily over the last five years, Bedford said.
Trump wants to engage in a bilateral free trade agreement with Japan, but the U.S. does have the option to rejoin the TPP negotiations, Jones said.