Amid Trade Talks, Texas Farmers Hope To Avoid Tariffs On Exports To China

Some say the proposed tariffs are having an effect already – even though they’re not yet in place.

By Christopher De Los SantosMay 17, 2018 2:19 pm|

President Donald Trump has brought or threatened tariffs against many U.S. trading partners in an effort to bring them to the negotiating table. China threatened back, promising to bring tariffs against many U.S. imports. That trade battle may seem far away, but it is making a lot of farmers in Texas nervous.

Texas exported about $1 billion worth of agricultural products to China last year, no small amount. Trade associations representing Texas growers are working to increase international sales and expand other markets, to blunt the effects of any eventual tariffs from China.

Robert Fleming farms grain and raises cattle for his family company in Troy, about 30 miles south of Waco. From his view on the farm, Fleming has some business concerns at the top of his list, like bad weather.

“It tore up my house and tore up a bunch of other stuff, you know a tornado came through here,” Fleming says. “That’s one of our big fears, too, along with Trump’s trade wars.”

Trade wars and tariffs are also a big concern for the Texas Farm Bureau.

“It is important that you note the tariffs on either side have not yet gone into effect,” says Communications Director Gene Hall.

If the tariffs from China do go into effect, they’ll need to find additional markets for agricultural exports.

“We’re concerned about all of them of course,” Hall says. “We’re concerned about soybeans. That’s our number one export to China. Cotton gives us some cause for concern because there are so few mills in the United States. Cotton is a very export dependent crop.”

Texas A&M Professor John Robinson says there are some other options for Texas cotton growers if China cuts back on its U.S. cotton consumption.

“We would ship more to Vietnam and Bangladesh and Indonesia and probably India and Pakistan,” Robinson says. “And all those countries would spin that cotton into yarn and sell it on to China duty free. So, in the long run, I really don’t expect that much of a disruption, even if China were to end up imposing a tariff on our stuff.”

But wheat farmer Ken Davis is concerned about a disruption.

“All the grains are tied together,” Davis says. “All the oil seeds, soybeans, it has an effect on wheat and corn and vice versa.”

And he says the proposed tariffs are having an effect already – even though they’re not yet in place.

“It’s the perception of tariffs,” Davis says. “Every farmer buys, purchases a lot of steel, aluminum and different things like that. All of those commodities have taken a drastic price jump just in anticipation of tariffs coming.”

Steelee Fischbacher is with the Texas Wheat Association.

“When we drill down further just talking about wheat, China was the number four market for U.S. wheat total last year,” Fischbacher says. “And they actually imported 11 million bushels of hard red winter, which is our primary crop in Texas. So, definitely a critical hard red winter market for us.”

The biggest markets for Texas hard red winter wheat are Mexico and Brazil, which present their own trade complications.

“Specifically with Mexico,” Fischbacher says, “I think the conclusion of the renegotiation of NAFTA is in the best interest of getting more wheat into that market. For Brazil, we do have a policy issue with them, where they’re not filling their tariff rate quota that they have agreed to in previous trade agreements where they would allow a certain percentage of wheat into that market duty-free. So, we’re working with them closely to see the completely fill that quote and get those bushels in. And so, whenever we see them fill that quote, we have a much better year with Brazil. So that’s something we’re going to continue to focus on, especially when we’re contrasting that with some of the market uncertainties with places like China.”

Gene Hall with the Texas Farm Bureau says, for now, those in the state’s agriculture industry are closely watching the international dance around a possible trade war.

“And we’re hopeful certainly,” he says, “that there can be negotiation to resolve the dispute before that actually occurs.”