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As U.S.-China trade war flares, American farmers fret

Farmers fear impact of trade war
  • China said it is halting new purchases of U.S. soybeans and other agricultural products after President Trump vowed last week to impose new tariffs on Chinese goods starting in September.
  • U.S. farm exports to China dropped to $9.1 billion in 2018, down from $19.5 billion the previous year.
  • The White House has already earmarked $28 billion in financial assistance for farmers whose sales to China have been crippled or blocked, and Mr. Trump on Tuesday suggested more aid could be extended.

American farmers, already struggling from the impact of severe weather and lower commodity prices, face another blow after China this week cut off all new purchases of U.S. agricultural exports amid an escalating trade war with the U.S.

In Kansas, farmers are already seeing the impact of China's move, which followed President Donald Trump's announcement last week that the U.S. would slap a 10% tariff on $300 billion in Chinese goods starting Sept. 1. Some, like Harvey County farmer Steven McCloud, only expect things to get worse.

"I think you could make the case that it'd only hurt Kansas farmers," McCloud told CBS Wichita, Kansas, affiliate KWCH-TV. "Anytime there's a trade dispute, agriculture takes it on the chin."

Zippy Duvall, president of the American Farm Bureau, called China's decision to halt purchases of U.S. farm products a "body blow" to thousands of farmers and ranchers, who find themselves caught in the cross-fire over trade between the two world's largest economies. Following Mr. Trump's threat of new tariffs, China this weekend let its currency depreciate and announced the moratorium on U.S. farm purchases.

Record rainfall and ongoing trade war hurting American farmers

The trade war is taking a toll. U.S. agricultural exports to China dropped to $9.1 billion in 2018, down from $19.5 billion the previous year, according to the American Farm Bureau. That figure has continued to drop, with exports to China in the first half of 2019 sinking to $1.3 billion. They peaked earlier in the decade as farmers worked to cultivate one of the world's fastest-growing markets in China, particularly for soybeans and hogs.

China was the fourth-largest market for U.S. food and agricultural exports in 2018, compared with its second-place status the year before. China alone represents 60% of the world market.

The cutoff of U.S. farm purchases and China's decision to let the value of the yuan drop come as China's leadership meets for its summer retreat to discuss its policy goals. That timing signals longer-term policy and not a temporary response to White House brinksmanship, Clayton Allen, an analyst at Height Securities in Washington, said in a report.

"While any decision to push back on the U.S. would have been made as a coordinated group, that it came during the retreat adds a layer of substance to the action that frames it less as a tactical decision and more a reflection of policy moving forward," Allen said. The decisions also come as China.

Montana Gov. Steve Bullock says trade war hurting farmers

In another sign of deteriorating U.S.-China trade relations could result in more pain for growers, Mr. Trump suggested over Twitter on Tuesday that he will provide more aid for farmers "if necessary." Farmers as a bloc were some of Mr. Trump's biggest supporters in the 2016 presidential election.

The White House has already earmarked $28 billion in financial assistance for farmers whose sales to China have been crippled or blocked. That includes $12 billion announced last year and $16 billion announced in May. That's less than the $22 billion the U.S. has collected in tariffs from companies importing goods to the U.S. from China as of July 24.

In California, where 80% of the world's almonds are grown, trees are just two to three weeks away from being harvested. China was the third-biggest market for the state's more than $20 billion in agricultural exports in 2017.

The halt in China purchases come at a time of year makes it "not good news whatsoever," Ryan Jacobsen, CEO of the Fresno County Farm Bureau, told CBS Fresno, California, affiliate KGPE-TV.

"There's been years, if not decades, put into establishing these markets and to see them go away overnight is very troubling," Jacobsen said.

CBS News correspondent Mark Strassmann went to an almond farm in California, where the news hit hard. Dave Phippen's third-generation family farm grows and processes 42 million pounds of almonds a year. Without Chinese customers, he worries about what will happen next. 

"As a farmer and a grower you feel rather powerless," Phippen said. "So you are hoping that the handler you have chosen to market your almonds with has some kind of a pathway that opens up markets."
 

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