Q: Why is China targeting U.S. farm goods with double digit tariff proposals?
A: China is responding to proposed tariffs announced by the U.S. to rein in intellectual property violations. Anti-competitive, discriminatory Chinese policies put pressure on American companies to transfer their technology and accept unfair licensing agreements, for example. It’s no secret that China is pursuing an ambitious agenda called “Made in China 2025” to ascend to the top rung of global technology. The U.S. cannot allow any trading partner to lie, cheat and steal their way to the top. That’s why the Trump administration used Section 301 of the U.S. Trade Act of 1974 to investigate China’s practices and now stop them from engaging in practices that unfairly burden and restrict U.S. commerce. To date, the administration has officially proposed $50 billion worth of tariffs on primarily high-tech goods made in China. The Chinese government has pledged to slap retaliatory tariffs, aimed squarely at American agriculture, including a 25 percent tariff on U.S. soybeans. The punch and counterpunch boils down to troubling news for Rural America. Farmers, factory workers and families in the nation’s Heartland would bear the brunt of this escalating trade dispute between our two countries. As a lifelong family farmer, I know how important exports are to the bottom line for grain and livestock producers here in Iowa. Our state is the number one producer of corn, pork, eggs and ethanol. Iowa soybean farmers harvested the second largest crop in the nation. China is the largest consumer of U.S. soybeans, buying up nearly 60 percent of our soybean exports, valued at $14 billion according to the USDA. One estimate forecast the proposed tariff fall-out would lower hog prices by $7 per head and drive down grain prices even more. Corn farmers will sow seeds into the soil this spring already facing market prices below the cost of production. Make no mistake. If U.S. farm exports are squeezed out of the Chinese market by double-digit tariffs, the rural economy would suffer a severe downturn. That’s why I have been urging the president and his administration to carefully consider the devastating repercussion that tariffs present for Rural America. With farm income already projected to reach a 12-year low, farm country can’t afford more trade restrictions. The public comment period on the administration’s tariff proposal runs through May 11 followed by a hearing on May 15. I’ll continue working to avert these tariffs, and there’s no doubt the federal government has a responsibility to mitigate the damage to those who are harmed.
Q: What led up to the current dispute between the two largest economies in the world?
A: For too long, China hasn’t played by the World Trade Organization (WTO) rules and aggressively pursues practices that unfairly undermine American ownership, innovation and entrepreneurship. China conducts and supports cyber intrusions into and economic espionage of U.S. companies. China’s pursuit of agriculture technologies, from wind turbines to genetic seeds, and its 2013 buyout of pork giant Smithfield Foods, cannot be underestimated. If dramatic changes in its trade policy regime aren’t made, China’s approach to seizing advantage in the marketplace will put U.S. businesses at a competitive disadvantage, threatening the long-term prosperity, economic growth and job creation here at home. The U.S. can’t sit on the sidelines and allow our trade partners to game the system. The adage known among teachers and parents applies to our global trade partners: “If you give them an inch, they take a mile.” By that measure, China must be called out for its programs and practices that exploit our trade relationship and absorb American ideas and innovation through theft, coercion or corporate take-overs. With that said, tariffs pave a path towards a slippery slope of mutual destruction. That’s why I joined the entire Iowa congressional delegation to spell out our grave concerns to the White House. Tariffs and paper tigers arguably share a common denominator. They have the potential to inflict a lot of unnecessary damage to the global economy and people’s livelihoods. There are more ways than one to skin a cat, including diplomacy and action through the WTO.
I voted to approve China’s seat at the table to join the WTO that opened market access to the world’s most populous nation on Earth. In the last few decades, China has transformed its economy into the second largest in the world with $13 trillion GDP. Let’s not kid ourselves. China is no longer a “developing nation.” It’s time for China to join the grown-up table, keep its commitments and follow the rule of law as a member of the WTO.
I’ve also introduced bipartisan legislation called the United States Foreign Investment Review Act that would put another tool in our arsenal to empower the U.S. to block foreign investment that threatens America’s long-term economic interests, specifically when that investment originates from a country that limits market access. History shows that tariffs can spiral into global instability and economic uncertainty. The U.S. and China need to step away from the edge of the tariff cliff and broker trade agreements in good faith that open market access in both nations to create higher-paying jobs, benefit consumers, drive investment and productivity and grow the economic pie for generations to come.
Senator Grassley last month joined a U.S. congressional delegation trip to China and South Korea where he discussed trade policies vital to Iowa farmers and the U.S. economy with foreign trade ministers.
