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What's Up Next for Ag in the Trade Wars?

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Posted on: May 15th 2019

Source: Politico

After ratcheting up tariffs on $200 billion in Chinese goods on Friday, President Donald Trump and his administration are trying to assure farmers and ranchers they will get help when Beijing retaliates. Agriculture Secretary Sonny Perdue tweeted that USDA would "work on a plan quickly," promising the president "loves his farmers and will not let them down!"

What's in the works? The president indicated his administration might buy up more U.S. farm goods - potentially $15 billion - and ship the commodities to needy countries. But that idea could take months to implement, offer little relief for farmers and sow even more chaos in world markets, writes Pro Trade's Adam Behsudi.

It's unlikely food aid programs could absorb enough commodities to meaningfully reduce the swollen stockpiles and thus raise crop prices to help farmers, said former USDA chief economist Joe Glauber, now a senior research fellow at the International Food Policy Research Institute.

Big picture: As tension with China rises and the new North American trade pact faces major opposition in Congress, Trump's overall trade agenda is on the verge of imploding. The president is hurtling toward his 2020 reelection bid with little to show for his trade promises other than frustrated farmers and a turbulent stock market, writes Pro Trade's Doug Palmer.

MIDWEST FLOODS COMPOUND TRADE WOES: An escalating trade war with China is not the only problem for ag: Major flooding along the Mississippi River in recent weeks has swamped farms and fields at the outset of planting season and bottled up barge traffic along the key waterway. Mayors of towns along the Mississippi, from Iowa to Louisiana, are sounding the alarm that the "one-two punch" from tariffs and floods could be a knockout blow to some farmers, your host reports.

"People's livelihoods are on the line here," said Phil Stang, mayor of Kimmswick, Mo., on a conference call with reporters. "Tweets, bluster and rhetoric can affect price and translate to a loss for farmers and our economy."
Trump's move to hike duties on Chinese goods sent U.S. soybean prices plummeting last week to the lowest levels in a decade. Related local industries like freight have also felt the effects of trade tension and severe weather, according to mayors on the conference call.

"We all thought we'd be out of this by May 2019," said Frank Klipsch, mayor of Davenport, Iowa, referring to Trump's trade feud with China.

Farmers and local officials in communities along the Mississippi and Missouri rivers are increasingly calling for a new system for controlling water levels, as flooding has become more frequent and catastrophic in recent years, The Wall Street Journal reports.

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