By MICHELE F. MIHALJEVICH

Indiana Correspondent

WASHINGTON, D.C. — Commodity groups have reacted sharply to the latest round of tariff threats between the United States and China, expressing fears the sanctions could severely hurt prices and sales. The agricultural equipment sector is worried, as well.

President Donald Trump said on June 18 the U.S. would impose a 10 percent tariff on $200 billion in Chinese goods if China retaliates for sanctions Trump previously announced on $50 billion in Chinese products. For its part, China has said it will enact tariffs on U.S. goods such as wheat and soybeans.

The effects of tariffs could prove devastating for American farmers, the National Assoc. of Wheat Growers and U.S. Wheat Associates said in a statement.

“The familiar African proverb says that when elephants fight, it is the grass that suffers,” the organizations stated. “Unfortunately for America’s farmers, that grass is the wheat growing in their fields as the big guys in Washington, D.C., and Beijing escalate their trade fight.”

The USDA has said net cash wheat farm income is projected to be down more than 21 percent this year compared to last, the statement added. “No one in China will be hurt if the retaliatory U.S. wheat tariff is implemented. China has huge amounts of stored wheat and they can purchase what they need from Australia, Canada or even Kazakhstan, although Chinese consumers will miss the opportunity to experience higher-quality products made from U.S. wheat.”

Soybean prices have taken a hit as a result of the trade spat, said John Heisdorffer, president of the American Soybean Assoc. “Prices are down almost $1.50 per bushel since the end of May and continue to plummet,” he noted.

“That represents a loss of more than $6 billion on the 2018 soybean crop in less than a month. We have approached the Trump administration repeatedly and implored them to hear our side of this story.”

The tariffs could disproportionately hurt America’s rural economy, given depressed U.S. farm incomes, said Dennis Slater, president of the Assoc. of Equipment Manufacturers (AEM).

“This is not only harmful, but inherently unfair to the hardworking men and women of our industry,” he said. “The American equipment manufacturing worker, the American farmer and the U.S. economy all lose as a result of the administration’s reckless and never-ending tariffs.”

Meanwhile, farm equipment dealers and manufacturers are worried about the impact of steel and aluminum tariffs imposed by Trump earlier this month on Canada, the European Union and Mexico.

The tariffs of 25 percent on steel and 10 percent on aluminum from those countries went into effect on June 1. In response, the countries have imposed or threatened tariffs on a variety of U.S. goods, including pork products, potatoes, apples, some cheeses, yogurt, sweet corn and milled rice.

“I’m definitely concerned the tariffs will have an impact on equipment prices,” noted Kim Rominger, president and CEO of the Equipment Dealers Assoc. (EDA) and executive vice president and CEO of the United Equipment Dealers Assoc.

“If prices go up, that will impact sales of equipment. Our members were just seeing a slight uptick from the down market. Sales will be depressed (with the tariffs). It’s a wait-and-see situation.”

Sales of all two-wheel-drive tractors were up 5 percent through May of this year compared to the same period a year ago, according to numbers released June 12 by AEM. Four-wheel-drive tractor sales increased 1.8 percent and self-propelled combine sales rose 26.5 percent.

Slater said a possible trade war with Canada, Mexico and the EU will disrupt the worldwide trading system, putting American manufacturing jobs at risk.

“These harmful tariffs will directly contribute to higher steel prices, increase costs for agriculture and construction machinery, wreak havoc on the business operations of equipment manufacturers and jeopardize many of the 1.3 million good-paying jobs our industry supports,” he explained.

Retaliatory actions from Canada, Mexico and the EU could result in “diminished U.S. exports and market access for American-made equipment and agricultural commodities,” Slater noted.

Last month, EDA and AEM released a survey of equipment dealers and manufacturers asking how Trump’s tariffs might impact the equipment industry. Nearly 68 percent of dealers and 76 percent of manufacturers said the tariffs will negatively impact sales of new equipment this year.

“Dealers are being optimistic,” Rominger said. “They think they have enough inventory to get them through this little cycle. Most manufacturers have cut back production over the last few years. It’s coming closer to a build-to-order situation. When we have a hiccup like this, dealers will feel it later.”

In an interview with Reuters earlier this year, Samuel Allen, Deere & Co. chief executive, said the tariffs could raise steel prices by 30 percent. He said Deere would absorb the costs of higher steel prices and work to cut other costs to offset the impact.

Indiana’s economy could suffer because many of the state’s manufacturers use steel and aluminum in their products, said Wally Tyner, a professor of agricultural economics at Purdue University. One of four Hoosier jobs is in manufacturing related to transportation, he noted.

“The higher prices of aluminum and steel would increase costs for those companies, likely leading to reduced sales and job losses. Indiana has four of the top 10 exporting communities in the entire U.S. – Columbus, Elkhart, Kokomo and Lafayette. Retaliatory tariffs could affect any or all of those communities,” he added.