Posts Tagged tariffs

Aug 5 2018

Trump tariffs sting farmers, businesses from sea to shining sea

The administration’s aid package has been popular with voters, particularly in rural areas, according to a new POLITICO/Morning Consult poll. | Saul Loeb/AFP/Getty Images

 

As President Donald Trump prepares to continue ratcheting up tariffs, the duties he has already imposed on $34 billion worth of goods from China and around $50 billion worth of steel and aluminum exports from around the world are causing pain across the United States.

That’s already prompted Trump to promise $12 billion in assistance to help farmers who have been hit with retaliatory duties on their exports to China, the European Union and other key markets. The aid package has been popular with voters, particularly in rural areas, according to a new POLITICO/Morning Consult poll. But the same poll also showed that most voters in farm states prefer free trade and better access to markets over subsidies.

So far, the administration has no plans to extend that aid to other adversely affected sectors, which the U.S. Chamber of Commerce estimated this week could cost another $27 billion.

Here’s a roundup of some of the complaints about Trump’s tariffs heard on Capitol Hill in recent weeks:

KANSAS — $361 million of exports threatened by retaliatory tariffs

China’s retaliatory tariffs on nearly all agricultural imports from the United States have hurt Kansas farmers like Stacey and David Forshee, who raise cattle and grow soybeans, corn and wheat on their farm in the north-central part of the state, Sen. Jerry Moran (R-Kan.) said last week during a Senate Appropriations subcommittee hearing.

“All told, it has been estimated that $361 million of Kansas exports are being threatened by various tariffs” imposed by China, the EU, Canada and Mexico in response to Trump’s actions, he said.

NEW HAMPSHIRE — Lost sales of mead, lobster

Moonlight Meadery, a small business based in Londonderry, N.H., “had a deal effectively killed by the retaliatory tariffs on American wine,” Sen. Jeanne Shaheen (D-N.H.) said. “This is a deal that would have doubled their output. For a small business that meant a lot. But what’s happened, they’ve had to lay off employees and they’ve also been hit by the increased cost of aluminum because of the tariffs on steel and aluminum.”

Another New Hampshire business, Little Bay Lobster Company, that previously sold 50,000 pounds of lobster to China each week “can no longer find a buyer,” Shaheen added. After the Trump administration slapped a 25 percent duty on $34 billion worth of Chinese exports, China retaliated with a 25 percent tariff that priced New Hampshire lobsters out of the market, Shaheen said.

Another business in her state, Intelligent Manufacturing Solutions Corp., expects to lose a $5 million circuit-board contract to a Chinese competitor because of Trump’s tariffs, Shaheen added.

TENNESSEE — Canceled home appliance plant expansion

Electrolux, a home appliance manufacturer, canceled a $250 million plant expansion in Springfield, Tenn., because of Trump’s decision to impose tariffs on steel and aluminum, Sen. Lamar Alexander (R-Tenn.) said.

Bush Brothers and Company, best known for its canned baked beans, has experienced an 8 percent decline in its revenue because of higher steel prices. Another Tennessee company that manufactures gas grills is taking a loss on every sale they make to Canada and EU because of Trump’s tariffs, Alexander added.

MAINE — Bleacher manufacturer caught in a price squeeze

Hussey Seating Co., a bleacher manufacturer based in North Berwick, Maine, has seen prices for steel increase 45 percent over the past year as a result of Trump’s tariffs. “And the problem is that this small manufacturer has locked in contracts, well before beginning a project that did not anticipate a 45 percent increase in the cost of steel,” Sen. Susan Collins (R-Maine) said.

Maine’s lobster industry, which is the state’s biggest exporter, has also taken a big blow as a result of retaliatory tariffs imposed by China, Collins added. To make matters worse, Canada now has a free trade agreement with the European Union that gives it duty-free access to the EU market, while Maine lobstermen still face tariffs of 8 to 30 percent, Collins said.

ALASKA — Salmon, cod and shellfish jobs put at risk

China’s 25 percent retaliatory tariff on U.S. seafood has “clearly rattled my state,” Sen. Lisa Murkowski (R-Alaska) said. The increased duty affects about 40 percent of the state’s salmon exports and 54 percent of its cod exports that went to China last year, she said.

“So this is, this is very, very significant to us. We’re still trying to figure out exactly what this means, not only to our fishermen but to the processors, the logistics industry, all aspects of the seafood supply chain,” Murkowski said.

In addition, Trump’s threat to impose a 10 percent duty on another $200 billion of Chinese exports could boomerang back on Alaska.

“Many of our fish and shellfish that are harvested in the state are then processed in China before re-importing back to the United States for domestic distribution. So in many ways, [Trump’s additional proposed tariffs would impose] a 10 percent tax on our own seafood, which is just a tough one to reconcile,” Murkowski said.

ARKANSAS — Hardwood lumber mills losing China sales

Hardwood lumbers mill in the Southern United States are also under pressure because of Trump’s decision to impose tariffs on China. The nation is the largest overseas market for U.S. hardwood lumber, but sales “essentially have ceased” since Trump’s duties went into effect, Sen. John Boozman (R-Ark.) said.

“Prices are in freefall, markets have collapsed, mills will be closing unless the situation is resolved fairly soon,” Boozman said, noting that the hardwood mills are the primary source of employment in many rural communities across the South.

WEST VIRGINIA — Auto supply chain vulnerabilities

Sen. Shelley Moore Capito (R-W.Va.) said she was worried about harm of new steel and aluminum tariffs on a Toyota production facility in Buffalo, W. Va., that employs 1,600 workers. But the effect could be even worse if Trump follows through on plans to impose automotive tariffs because parts made in the state cross the border with Canada at least two times.

“The raw aluminum comes from Canada. It goes to a Toyota plant in Tennessee that makes the engine block. The engine block then comes to West Virginia, where we make, very well, the six-cylinder engines and additions to the transmissions. Then half of those engines go from West Virginia back to Canada, where they are dropped into Lexus RX and then brought into this country for sale,” Capito said.

DELAWARE — Prospect of lost chicken sales to South Africa

After years of pressure, the Obama administration persuaded South Africa to remove barriers to U.S. poultry exports. Now all that progress is at the risk of being lost because Trump hit South Africa with tariffs on its steel exports, said Sen. Chris Coons (D-Del.).

“I had a very difficult meeting with their trade minister,” Coons said. “They’re going to be justified in imposing countervailing duties that may well close the door to this newly opened market for our poultry.”

WASHINGTON STATE — Apples, cherries and pears caught in the crossfire

Not long after Trump imposed tariffs on Chinese-made steel and aluminum, Beijing began insisting on inspecting all shipments of U.S.-produced apples, making it impossible for Washington suppliers to continue to trade, Cass Gebbers, president and CEO of Gebbers Farms in Brewster, Wash., told Congress in July.

While that situation improved after a while, China has boosted tariffs on U.S. apples, pears and cherries to 50 percent, from 10 percent previously, in response to duties imposed by Trump. That jeopardizes about $130 million in cherry sales, $50 million in apple sales and $1.5 million in pear sales to the Asian market, Gebbers said.

TEXAS — Hitting cattle and dairy farmers at a bad time

“With Texas relying so heavily on trade overseas, we are concerned with the blowback from the administration’s decision to place tariffs on our trading partners,” Russell Boening, a dairy and cattle producers from Poth, Texas, said in testimony to Congress.

“Agriculture is bearing the brunt of retaliation at a time when farmers are already facing low commodity prices, high input costs and unpredictable weather. Net farm income has also dropped 52 percent in the last five years, making it extremely difficult for farmers and ranchers to continue operating,” Boening added.

MINNESOTA — Three biggest agricultural export markets threatened by tariffs

Kevin Paap, president of the Minnesota Farm Bureau told Congress about how much farmers in his state rely on its three biggest markets: Canada, Mexico and China. In 2016, agricultural and food exports accounted for nearly one-third of Minnesota’s total merchandise exports,” he said. “Specifically, more than 24 percent of all Minnesota agricultural exports go to Canada and nearly 24 percent of all Minnesota agricultural exports go to Mexico.”

He stressed that the better course of action would be to expand, rather than contract, trade. “The current tariffs, continuing back-and-forth retaliatory actions and trade uncertainties are hitting American agriculture from all sides and are causing us to lose our markets,” he added. “Once you lose a market, it is really tough to get it back.”

MONTANA — Indebted young farmers worried about the future

Farmers just starting out are already feeling discouraged when they see gluts and falling prices. That is going to make it harder to motivate the next generation, several producers have noted.

“For young and beginning farmers like me the stakes are even higher,” said Michelle Erickson-Jones, president of the Montana Grain Growers Association. “We are often highly leveraged, just establishing our operations, as well trying to ensure we have access to enough capital to successfully grow our operations. Increased trade tensions and market uncertainty makes our path forward and our hopes to pass the farm on to our sons less clear.”

NEW JERSEY — Bitten by South Korean steel quota restrictions

South Korea was one of the few countries that escaped Trump’s new 25 percent duty on steel, but only because it agreed to restrict its exports to the United States at 70 percent of the average levels for 2015 to 2017. That has created a huge headache for Micro, a precision medical-device manufacturer based in Somerset, N.J.

“Let me be blunt: For Micro, this quota is catastrophic,” the company’s president, Brian Semcer, said in testimony. “Under a best-case scenario, the quota would limit Micro’s steel imports to 70 percent of our recent yearly average. That would mean a 30 percent loss of market share and would effectively bar us from helping our customers develop and introduce any new products or expanding our operations in the foreseeable future.”

MARYLAND — Forking out big bucks, and time, for tariff exclusion requests

Companies that rely on imported steel can receive an exclusion from the new steel and aluminum tariffs, if they can prove to the Commerce Department that no domestic steel company can manufacture the product they need. That’s turned out to be a costly and frustrating experience for many manufacturers, including Independent Can Company, a family-owned business based in Belcamp, Md.

Company President Rick Huether told Congress his company has spent over $50,000 internally for employees to prepare 40 exclusion request. “This represents over 500 hours which could have been time spent building the business versus defending the business,” he said.

FLORIDA — Frustrated by government bureaucrats

Other companies complain of their treatment by Commerce Department officials assigned to decide whether their exclusion request will be approved. That was the experience of Sanitube, a family-owned manufacturer based in Lakeland, Fla., that makes stainless steel tubes, valves and fittings for use in the food and beverage processing industry.

After its first exemption request was denied, Sanitube spent three weeks unsuccessfully trying to contact department officials by both phone and emails to find out why, company president Todd Adams told Congress.

Finally, the company asked for help from Sen. Bill Nelson (D-Fla.), which led to a phone call from Matthew Borman, the deputy assistant secretary of Commerce for export administration. Although Borman did explain the mistake the company made in its paperwork, Sanitube still had to start the exclusion process again.

Adams also complained about difficult interactions with one Commerce Department staffer, whom he accused of a “lack of professionalism” because of the way he handled Sanitube’s exclusion request.


Original post: https://www.politico.com/story/2018/08/01/trumps-tariffs-sting-farmers-businesses-from-sea-to-shining-sea-717555

Jun 22 2018

China stops buying US squid in advance of tariffs

A California market squid. Photograph courtesy of the National Oceanic and Atmospheric Administration.

The 25% retaliatory tariffs that China has promised to slap on about a billion dollars worth of US seafood imports don’t go into effect for another three weeks, but US squid producers already are feeling the pain.

Chinese buyers have started cancelling their orders out of concern that shipments won’t arrive in time, Undercurrent News has learned.

“People are not buying anything right now,” said Jeff Reichle, president of Lund’s Fisheries, a squid harvester, processor and exporter based in Cape May, New Jersey. “China is completely dead.”

China issued its retaliatory tariffs late on Friday, including nearly 200 seafood items along with numerous agricultural goods in a list of some 545 total items worth a combined $50bn, as part of a tit-for-tat trade battle with US president Donald Trump. Trump earlier in the day had updated the list of Chinese products for which he had levied a 25% import tariff, increasing the number to 1,102 worth $50bn.

Calamari. Photo courtesy of Del Mar Seafoods.

Following China’s response, the White House on Monday night further upped the ante by ordering the US Trade Representative to draw up a new list of $200bn-worth of Chinese goods to hit with an additional 10% tariff.

Beijing’s tariffs threaten to hit a number of seafood sectors particularly hard when they go into effect in a few weeks, including the US lobster industry, which counted on China to buy 7,894 metric tons of lobster in 2017 worth $136.9 million.

Not too far behind the US lobster industry in its reliance on China is the US squid industry.

The US sent China 34,713t of squid worth $92.8m in 2017, nearly half of its overall 71,165t squid export volume and more than half of its $181.9m overall export value, based on National Oceanic and Atmospheric Administration data (NOAA).

By comparison, the second and third largest markets for US squid are Vietnam, which imported 8,855t worth $25.4m last year, and Japan, which imported 8,055t worth $21.5m.

‘We’re all dazed and confused here’

In particular, it’s the California market squid (Doryteuthis loligo opalescens) that the Chinese love. China imports roughly 70% of the 107,048 metric tons of the species caught off the California coast, estimates Joe Cappuccio, founder and president of Del Mar Seafoods, the US’ largest harvester and processor of the species.

Smaller and less expensive than most other squid, the California market squid can reach a total “tube length” of 28 cm, though a more typical size is 10 to 15 cm. They live just six to nine months, dying shortly after they reproduce, but are known for being able to handle a high amount of fishing pressure.

The California squid fishery was started in 1863 by Chinese immigrants, who used torches at night to attract them and skiffs to encircle a net around them. Today they’re caught by purse seiners and light boats who still use lights to draw them in.

When it comes to consuming the creature, “there is no substitute for California squid”, Reichle said. “The person that goes to a restaurant in China and orders a lobster is not the same person that orders squid. The squid, in China, is eaten by everyone, regardless of income level.”

Americans see squid and think calamari. But in China, squid is often served in a hotpot, dropping it into boiling water at a table. As a result, it’s popular during winter months.

China’s move was a punch to the gut for Del Mar, Cappuccio said. His company maintains eight of its own squid harvesting vessels and contracts with three other independent boats to harvest 20% to 25% of the California quota.

Lund’s, which also maintains a West Coast operation, catches and processes about 10% of California’s squid, said Reichle.

“We’re all dazed and confused here,” Cappuccio said on Tuesday.

China recently has paid top dollar for the California squid – roughly $2,700 per metric ton – plus a roughly 27% tariff based on a “minimum price” set by the Chinese government of $3,500 ($945). However, once the new 25% tariff ($911.25) is added on, the cost of squid in China will go from a total of $3,645 per metric ton to $4,556.25, an amount he and Reichle are both convinced the Chinese importers will not being willing to bare.

There are few remaining options for the US companies, except for reducing costs in order to keep the pain as low as possible for the Chinese buyers, the two men said.

“We’re all going to have to cut our margins back, the harvesters and the processors,” Cappuccio said.

On the bright side, as the price of squid is reduced, doors might open in other countries that were outbid by China. Cappuccio mentioned the Philippines, which he suggested could buy eager to buy more than the 1,732t of squid it spent $4.2m on in 2017.

Chinese importers similarly will struggle to replace California squid, Reichle said. There aren’t other kinds of squid that can easily take its place. In recent years when El Ninos, bands of warm ocean water that develop in the central and east-central equatorial Pacific, have hurt production, China simply went without importing as much squid, he said.

Solution needed before October

Undercurrent confirmed at least one report of squid containers on the water that may not get into China. Cappuccio said his company is keeping its fingers crossed for a few that were en route to China on Friday when the news broke about the tariffs.

But it could be worse, he said.

The Monterey Bay area of the California coast where squid are being harvested now accounts for only 20% to 30% of the total annual quota. The much larger portion, roughly 80%, will get harvested in the more southernly California coast between early October and late December.

However, should the Trump administration not be able to work out its differences with China before early October, the US squid industry could be in trouble.

“Come October, our company alone will be packing and shipping 30 containers a day, and we’ve done as many as 40,” Cappuccio said, noting that a single container typically contains 50,000 lbs.

Multiple trade experts have been quoted in the press as expressing skepticism that a deal can be reached between China and the US before July 6, and one trade expert said it could take the rest of the year. But Cappuccio is trying to remain optimistic.

“I think it’s too early right now to know what to think,” he said Tuesday. “We’re all guessing at this point.”


Originally posted: https://www.undercurrentnews.com/2018/06/20/china-stops-buying-us-squid-in-advance-of-tariffs/

Contact the author jason.huffman@undercurrentnews.com