Donald Trump’s expanding trade wars continue to anger US farmers

That’s National Farmers’ Federation (NFF) President Fiona Simson’s understatement, made after the US President launched his second significant trade salvo is as many weeks; this time directed at the booming Chinese agricultural export market.

But Ms Simson says bad news for US agriculture on the back of Donald Trump’s burgeoning trade wars also represents good opportunity to enhance exports for Australian farmers.

Mr Trump’s announcement late last week that about US$60 billion worth of tariffs would be slammed on Chinese imports arrived shortly after he revealed a 25pc tax on imported steel and a 10pc on aluminium.

That move sparked angry backlash and immediate calls to reverse the President’s protectionist policies, for fear of being stranded in the cross fire of a tit-for-tat trade war, from American farmers.

But on Friday, China’s Ministry of Commerce announced a list of 128 tariff measures on US farm imports, amounting to about US$3b, in retaliation to the steel and aluminium tariffs.

While the US$3b is not seen as being overly significant in terms of the overall trade volume between the two countries at about US500b, a spokesperson said the list targets US farm exports like fresh and dried fruit, pork and pork products, wine and nuts, that now face reciprocal Chinese taxes of 15pc and 25pc.

Fears have also been expressed by US grain farming leaders that soybeans will be in the firing line of the new tariff wall Mr Trump announced against China late last week with wheat and corn also set to suffer.

American Farm Bureau Federation President Zippy Duvall said if the trade situation continued to deteriorate, “our lives as farmers and ranchers will become more difficult”.

He said America’s farmers and ranchers exported more than US$20b of farm products to China – more than 15pc of all US agricultural exports.

“After Canada, China is our second-largest customer for ag exports,” he said.

“In retaliation for what our government says are justified US trade measures against China on intellectual property issues, Chinese officials now have indicated they are prepared to slap tariffs on US pork, wine and fruit.

“Our farmers and ranchers depend on trade for a living and we are very concerned about retaliation resulting from the tariffs.

“China is an important market for US pork, and with about US$1b worth of it going to China and Hong Kong, it’s our second-biggest market.

“This will really hurt US pork producers.”

Mr Duvall said farm income across commodities had fallen by about 50pc over the past four years and retaliation in the trade arena “makes our outlook even worse”.

“This could not be happening at a worse time for American agriculture,” he said.

“We expect all countries to trade fairly and we support enforcement of trade rules.

“But we also hope trade disputes can be resolved without harming an industry that is a bright spot on trade and is so important to rural America.”

China is Australia’s largest agricultural export market valued at $10.3b in 2016 which has climbed from $6.6b in 2011 led by wine, wool, beef, grains, dairy and sheep and goat meat with those exports boosted by tariff cuts in the free trade agreement that came into play in late 2015.

Ms Simson said the US was one of Australia’s biggest export competitors in major farm commodities like beef and when they pulled out of trade deals like the Trans Pacific Partnership (TPP) - recently re-signed among the 11 remaining countries including Australia – or imposed tariff barriers on China, it had an upside for local exports.

“The very fact that Australian farmers have access to markets, at competitive tariffs, in some cases better than the access that’s available for some of our biggest competitors, it does mean good things for Australian farmers,” she said.

“The NFF position on trade is that we should have a level playing field throughout the world when it comes to trade so we welcome competition from the US and we welcome the US coming into markets and opening up markets and we believe opening free trade is the best way to proceed.

“However, it we have preferential access to some of the world’s biggest markets and US farmers are unable to access those markets, then certainly our farmers will reap some rewards and receive benefits that are not there for US farmers.

“Asia is one of our biggest markets and the proximity of Asia to Australia makes it one of our preferential markets.

“To be able to negotiate lower tariffs into markets like Japan for our red meat, through the TPP, those sorts of arrangements are not open to the US farmers.

“So if I was a US farmer, I’d be very cranky with Donald Trump.”

Ms Simson said in contrast, the Australian government was doing a “great job” in terms of opening up markets.

“Australian agriculture is very export dependent – we do need access to markets and we don’t have enough population to sustain our own agricultural industry,” she said.

“We do a great job of feeding people throughout the world and they love our products because of the provenance and quality of our products so we need to have markets and doors opened to be able to sell those products.

“And if we can do so in a way that’s preferential to our biggest competitors like the US, that’s a win for Australian farmers.”

The US Wheat Associates and National Association of Wheat Growers (NAWG) said they understood the need to enforce international trade rules of the World Trade Organization (WTO) but “we are very concerned” about the implications of the Trump Administration’s decision to impose more than $60b in tariffs on Chinese goods.

“Recent actions including withdrawal from the Trans-Pacific Partnership and implementing steel and aluminium tariffs on the basis of national security have already undermined US leadership in international trade,” a statement said.

“Now this action further erodes historical support for rules-based trade policies, even though China will likely bring a case against the tariffs within the WTO dispute settlement process.

“In addition, USW and NAWG fear that applying unilateral tariffs could invite retaliation that, as recent history shows, would be aimed at US agricultural products.

“This could very well include China throwing up road blocks to US soybeans, wheat, corn and other commodity imports, which would cut into already unsustainable farm incomes.

“We welcome the administration’s strong support for enforcing trade rules.

“We only wish it would have challenged China’s state-driven policies in ways that complied with and strengthened existing trade rules. “

GrainGrowers market analyst Luke Mathews said currently there was zero Australian soybean exports to China but canola is exported as a soybean substitute.

He said China had historically been an important market for Australian canola but the European Union had dominated in recent years.

“There is much excitement that the China-US dispute will further strengthen Aust-China grain trade relationships, particularly for sorghum and barley,” he said.

“China is already Australia’s most valuable grain trading partner, and the general feeling from the past few days in China is that both sides have a commitment to further strengthen this relationship.”

Prime Minister Malcolm Turnbull said Donald Trump had indicated last week’s tariffs on China were the beginning of a negotiation.

“His contention is that trade should be fair and reciprocal - we understand that - that is the reason why Australia has been exempted from the steel tariffs,” he said.

“As Donald Trump said, trade between Australia and the US is fair and reciprocal with zero tariffs on US imports into Australia.

“We have a very close security relationship and America actually has trade surplus with Australia and we don’t complain about that.

“We’ve got surpluses with other countries.

“So the important thing is no one wins in a trade war, no doubt about that.

“We look forward the US and China to being able to negotiate a satisfactory arrangement that suits both sides.”

Mr Turnbull said Australia’s focus should be on supporting good constructive negotiations.

“President Trump has talked about how much he respects President Xi,” he said.

“I have been with them and the two men see eye-to-eye in every respect – they are about the same height, both big guys – and I look forward to them being able to negotiate.

“But I don’t want to speculate on actions that haven’t been announced.

“We’ve got a free trade agreement with China which has been very important for agriculture.

“We’ve seen a massive…64pc increase in wine exports alone to China since the China-Australia Free Trade Agreement came into play.”

Mr Turnbull said other markets had opened up through a free trade agreement with Peru recently and the TPP while a free trade agreement with Indonesia was also being worked on and one with the European Union.

“All of these things are hard by the way. Free trade agreements, it’s not an easy glide path and you have setbacks, there are hills and hollows in the road you pursue,” he said.

“But my job as Prime Minister is to make sure that I create the best opportunities for Australian businesses to export, because that means they invest and that means they create more jobs.”

Mr Turnbull said through the TPP on beef alone Australia had a competitive advantage against US ranchers with a “much lower tariffs”.

“It is my job as Prime Minister to fling open as many doors for Australian exports as I can,” he said.

“Those that are open, get them open even more, because we are the best.

“We can compete on the biggest, broadest playing fields around the world (in agriculture) to ensure we can produce the food we require and to take advantage of those opportunities.”