Agriculture Secretary Tom Vilsack points to two things as the main causes of what’s expected to be a record farm trade deficit this fiscal year for the U.S..
He says the strength of the U.S. economy with its stronger dollar, is a big part of USDA’s projected $32 billion agriculture trade deficit.
“As a result, we’re not seeing the level of purchasing we’ve seen in the past. Secondly, we’ve seen a rather significant decrease in some of the purchases from China. They used to be our number one customer. They’re now our number two customer.”
Vilsack says the U.S.’s trading relationship with China is also complicated by political tensions between the two countries.
“It’s pretty difficult when your number one customer’s being criticized, that they would expect that they would continue to be our number one customer.”
However, ag state republicans like South Dakota U.S. Senator John Thune see a lack of administration trade deals as the main culprit.
“Market access is what our farmers and ranchers are looking for to open up the markets, so they can sell their products, and get the trade deficit back to a trade surplus, and get this net farm income back in the positive column.”
Vilsack says USDA’s trying to do that, but not by creating free trade agreements.
“We’re working to diversify our efforts to move away from an over-reliance on China and some of the larger markets. It’s the reason we’ve invested a billion dollars from the Commodity Credit Corporation in the Regional Agricultural Partnership Promotion Program. It’s the reason why we’ve increased the number of trade missions.”
Vilsack says using tariffs as a way to equal out trade imbalances doesn’t work.
“We’ve had experience with this, and we know what it does to markets in agriculture.”
Former President Donald Trump put the tariffs into effect that first prompted China to retaliate against U.S. farm goods. President Joe Biden has left those tariffs in place and is considering additional ones.
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