Exports and trade are on my mind this week. The Trump administration and USDA announced recently that they have secured $12 billion to help agriculture take the bite out of Trump’s trade disputes. It’s ironic that agriculture is taking the brunt of the tariffs imposed by other countries, particularly China, and it appears that agriculture is firmly behind Trump.
Beef export sales remain robust and U.S. Meat Export Federation (USMEF) said that beef sales were 9 percent higher than a year ago and up 21 percent on value for the first six months of this year. Pork has been in the trade spotlight because China and Mexico import lots of it. Pork sales for the past two months have been lower than last year. I think it’s entertaining that a Chinese company bought Smithfield and they are sending Ractopamine-free pork to China, even though it’s now a Chinese company and they are penalizing their own countrymen.
With these trade disputes, it seems like everyone—except China—has come to the table and is ready to rewrite trade agreements. The European Union came to the table a couple weeks ago, ready to talk. And Trump is right that the reciprocal trade hasn’t occurred. We bring in products from Europe and pay a much larger tariff than they do buying U.S. products. I hope he can tear down the non-tariff trade barriers with the EU over beef and the use of growth promotants. One would think that after using hormone implants for 50 years, without any negative health effects, the Europeans would finally capitulate.
The big prize for the administration is China. I wonder how the Chinese economy would be if they didn’t have the U.S. to buy all their stuff. We bring in boatloads of products from plastic cups to bulldozers. And for the most part we ship them commodities. They have been good at making stuff and lots of it.
With 1.3 billion people, China represents a huge market for the rest of the world. Their middle class is larger than the entire U.S. population. It’s a huge consumer market that everyone in the world wants a piece of. Can you imagine what it takes to feed that many people?
I do wonder who needs who the most. One thing government doesn’t want is hungry, starving people. If they are not content they get angry and start protesting and I would think that 1.3 billion angry Chinese wouldn’t be pretty.
The Chinese have had a taste of capitalism and I think they kind of like it. When they must start paying more for food, and there are shortages of food products, they’re not going to like it. We must remember that they are a communist government trying to do business in a somewhat free market world.
There has been a lot of talk recently about China and the World Trade Organization (WTO). The WTO was the brain child of the U.S.; it was intended to establish global trade rules and a dispute settlement process. China joined the WTO in 2001. Everyone thought that when they got a taste of global trade they would start tearing down their autocratic ways and conform to global trade standards.
Now there is a lot of talk that the WTO is in trouble and cannot properly enforce trade laws. Folks are thinking that Trump is trying to kill it because the U.S. won’t allow the appointment of any new appeal officials. But it appears that the members—164 countries—are coming around and agree that the organization needs a tune up too. It seems only logical that an organization that’s been around over 50 years would need its rules revamped.
What I don’t really understand is where did all of China’s money come from? Did we or the Europeans finance the global expansion of China? They are essentially colonizing the world’s smaller, weaker and poorer countries, and financing huge infrastructure projects so they can utilize natural resources and the agriculture base of these countries. Sri Lanka just turned over their largest port to China to pay a huge debt China lent them.
It appears to be unanimous in trade circles that China doesn’t play fair. They have become a good customer for U.S. agriculture, which would like to see this trade episode pass quickly. The longer this trade dispute lasts, the worse it is going to be for everyone. I would expect China to come to the table quickly. — PETE CROW