While U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) understand and support the need to enforce international trade rules, we are very concerned about the implications of the Trump Administration’s decision yesterday to impose more than $60 billion in tariffs on Chinese goods under Section 301 of the Trade Act of 1974.
We agree that unfair Chinese government policies create unnecessary trade distortions that hurt U.S. farmers and other industries. Our organizations urged the U.S. government to challenge China’s domestic price support and tariff rate quota compliance that led to cases disputing these policies within the World Trade Organization (WTO). Such cases served notice to China and our trading partners that the United States would lead a legitimate effort to enforce existing trade rules—by following those rules. We believe that it is in the nation’s best interests, and the interests of the wheat farmers we represent, to challenge trade distorting policies to the maximum extent possible within WTO rules.
It is unfortunate that the well-intentioned decision to challenge other Chinese trade policies has been implemented in a way that violates the rules outlined in Article II of the GATT Agreement. Recent actions including withdrawal from the Trans-Pacific Partnership and implementing steel and aluminum tariffs on the basis of national security have already undermined U.S. leadership in international trade. Now this action further erodes historical support for rules-based trade policies, even though China will likely bring a case against the tariffs within the WTO dispute settlement process.
In addition, USW and NAWG fear that applying unilateral tariffs could invite retaliation that, as recent history shows, would be aimed at U.S. agricultural products. This could very well include China throwing up road blocks to U.S. soybeans, wheat, corn and other commodity imports, which would cut into already unsustainable farm incomes.
We welcome the administration’s strong support for enforcing trade rules. We only wish it would have challenged China’s state-driven policies in ways that complied with and strengthened existing trade rules.