China Trade Negotiations: A Primer
South Dakota’s manufacturers and ag producers have been at the tip of the spear in our trade negotiations with China. At a time when farmers and ranchers are facing the worst agricultural crisis since the 1980s, it’s more important than ever the administration finalizes a trade deal with them that is good for American producers.
For the past two years, President Trump and members of his administration have been working on a trade deal with China that will level the playing field and stop their trade ‘cheating’ once and for all. China has been an unfair trading partner for decades. When President Trump took office, the average tariff we imposed on China was approximately 4 percent. Conversely, China’s tariffs on U.S. goods were about 10 percent. While this alone is concerning, they are also stealing U.S. intellectual property, committing cyber espionage and engaging in unfair trade practices in order to gain advantages for Chinese companies. According to the U.S. Trade Representative, “Chinese theft of American IP currently costs between $225 billion and $600 billion annually." This must be stopped.
While we appeared to be close to a deal just a few weeks ago, China backtracked at the last minute and tried to renegotiate previously-agreed upon terms. In response, the U.S. raised tariffs on some Chinese imports and China retaliated with additional tariffs on U.S. goods that will take effect June 1. Nobody wins in this situation - raising tariffs on China will ultimately hurt the economies of both countries. More importantly, our farmers, ranchers and manufacturers are already paying a price.
Ideally, we would have signed the Trans-Pacific Partnership (TPP) and finalized new agreements with our trading partners in Europe, North America and elsewhere to create a united front and put pressure on China to come to the negotiating table in good faith. When we have access to more markets in which we can sell U.S. products, the stronger hand we have in dealing with China.
When I speak with South Dakota producers and manufacturers, the majority of them tell me they want a trade deal in place with China, but they understand it needs to be a fair deal. At the end of the day, their message to me and to the president is that they’re hurting and they can’t take much more of this uncertainty, but they support the president’s goal and want him to get the job done, as soon as possible. I continue to share their message with the White House every chance I get.
South Dakota producers and manufacturers are also paying attention to the U.S.-Mexico-Canada (USMCA) trade agreement that would replace the North American Free Trade Agreement, or NAFTA. Canada and Mexico are vital trading partners that currently buy more than one-third of U.S. merchandise exports. The president has negotiated and signed the USMCA, and now it’s up to Congress to act.
Trade deals are vital to the long-term stability and viability of our ag and manufacturing industries in South Dakota. We need stability in our commodity prices and we need strong trade deals. With net farm income down 50 percent for the fifth year in a row, farmers and ranchers need a good trade deal in place now so they can have access to markets in which to sell their products.
Like the many farmers, ranchers and manufacturers I talk to whose livelihoods depend on securing a trade deal, I continue to support the president’s efforts to get the best deal possible. It’s time for China to stop moving the goalposts and negotiate with us in good faith so we can finally get a trade deal in place.
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