China Threatening To Retaliate Against U.S. With Pork Tariffs
AILSA CHANG, HOST:
China is responding to planned U.S. tariffs by threatening tariffs of their own on all sorts of products - dried fruit, wine, steel pipes, recycled aluminum and pork. U.S. pork producers are watching closely. They have seen pork prices drop with just the talk of a trade war. David Struthers is a hog farmer and former president of Iowa's Pork Producers association. Welcome.
DAVID STRUTHERS: Thank you for having me.
CHANG: First off, can you tell us a little bit about your operations? How many pigs do you raise every year?
STRUTHERS: Well, I'm in a family farm. My parents are in their 70's, still live here on the farm and own the majority of the shares of the business. I'm 50 years old. My brother's 46. And we're the ones that take care of the crops and livestock. We produce about 6,000 pigs to market every year.
CHANG: So when China says it's going to be imposing tariffs on U.S. pork, tariffs that might be as high as 25 percent, how did that make you feel?
STRUTHERS: I was very upset. The tariffs against U.S. pork are going to be rather difficult to overcome. Any time that a pork product is going to go overseas and now it is not going to be - go overseas, it has to go somewhere else. So it has to either go to a different country than China, or it has to be consumed here. And any time we overload the market with product, that pushes the prices down for everybody.
CHANG: So you expect your prices to go down if China were to impose tariffs on pork?
STRUTHERS: Oh, yeah, definitely. They're already going down on the CME.
CHANG: CME - that's the Chicago Mercantile Exchange.
STRUTHERS: Correct. We've had about an 18 percent drop in about the past six weeks, and that's just been the timeframe that the president has been talking about steel tariffs. That's played a lot of the role in that 18 percent drop in our price that we can receive.
CHANG: What about other meat producers? How might they be affected by these tariffs if the tariffs were on pork?
STRUTHERS: Well, if the tariffs were on pork, likely the price would come down of pork. Therefore the price would eventually get cheaper to the consumer in the grocery store, maybe enticing them to not buy as much beef or not buy as much chicken and can also then lower the prices.
CHANG: Wow, so effects are going to ricochet all over the meat production industry.
STRUTHERS: It certainly does. And most people don't understand how complex the system is. But when you start lowering the prices to the point where producers are cutting back their numbers or are going out of business, then you have less need for corn and soybeans and other grains that are fed to those animals, and therefore those prices come down.
And when farmers are not making money either raising grains or livestock, they don't go and buy new machinery. And the people that build the machinery - they don't go out and buy a new car. They don't go buy new furniture for their home. And so the whole economy suffers because people are not making a good living.
CHANG: Is there any upside here that you can think of that would come with this tit-for-tat, if you will, between the U.S. and China on trade?
STRUTHERS: I really don't. You know, trade is what creates relationships. We understand their needs. They understand our needs. They buy lots of agricultural products from the United States. We buy lots of manufactured goods from them. So it's kind of a win-win for everyone. I don't see with - tariffs being a win for anyone, really.
CHANG: What would you need to hear from President Trump to reassure you that you're going to be OK?
STRUTHERS: Well, I would have to hear that he has talked about bilateral trade agreements. I want to see some progress and not just lip service on those. But they take time, and time is of the essence right now because with livestock production, we cannot just hold the product off the market hoping for the market to go up. Animals reach a specific weight range, and they need to be marketed whether it's a profitable price or an unprofitable price. And of course we want to have a profitable price so that we can maintain our liquidity and our standard of living and any business. You can't run a business at a loss.
CHANG: David Struthers is a pork producer in Iowa. Thank you very much for joining us.
STRUTHERS: You're very welcome. Transcript provided by NPR, Copyright NPR.