Wednesday, February 12, 2025

Trump’s Tentative Trade Trouble

By Peter Bachmann
President and CEO
USA Rice

There are few American commodities as dependent on trade as rice is. Despite being a relatively small crop in terms of U.S. acreage, we are the 5th largest exporter in the world and the largest in the Western Hemisphere. And about half of the southern crop and an even greater percentage of the California crop are destined for mills and markets in more than 120 countries around the world. Trade is important to us!

For the past four years, we have decried the lackluster trade agenda of the Biden Administration: we thought they might build on successes with Cuba from the Obama/Biden days. Not really. We were forced to drag, push, and pull his USTR to file a WTO case against India, despite overwhelming evidence of the world’s top rice exporter’s misdeeds. We also didn’t see any sense of urgency to find new export markets where U.S. rice would be sought after, and in fact, President Biden walked away from free trade talks with the United Kingdom that were started during Trump 1.0.

The $773.4 billion question is: what will President Trump’s trade agenda look like in his second term? The legacy from his first term left rays of hope.

The North American Free Trade Agreement was renegotiated and reimagined as the U.S.-Mexico-Canada Agreement, which was fine. But after the U.S. pulled out of the Trans Pacific Partnership, what replaced it gave some of our top competitors easy access to Mexico who were able to displace us to some extent. And of course, the nomination of Florida Senator Marco Rubio to be Secretary of State doesn’t bode well for U.S.-Cuba relations.

And then of course, there were the retaliatory tariffs on U.S. agriculture in response to completely unrelated steel and aluminum tariffs that seem to be on the horizon for us all again.

As we know from recent history, no matter what the U.S. slaps a tariff on, if a country is going to retaliate, they generally first turn to agriculture. And rice, so export dependent, can disproportionately bear the brunt. Like we have done in China, Europe, Turkey, and the UK.

We will have to wait and see how his tariff plan plays out; perhaps it ends up being more targeted than initially advertised.

The President wants to appeal to import sensitive industries, like steel and aluminum, but let’s not forget that U.S. rice has long been a staple in the domestic market, and we’ve been rapidly losing market share to underpriced imports, making us a perfect example of an import sensitive industry. So, if President Trump is going to target tariffs, we respectfully request he look at rice imports from the world’s top four exporters in the Far East. The rice exporters in the region ­— India chief among them — do not play by the rules. They openly acknowledge this to the World Trade Organization.

India, because of their sheer volume and market dominance, make it practically impossible for anyone to compete. In some cases, like with Thailand and Vietnam, they begin cheating to keep up. Our government couldn’t ever afford to catch up to what they’re doing and even if we could, we’d be violating the rules.

A major factor in the need for an improved safety net for U.S. rice is that India artificially suppresses global rice prices while input costs continue to soar. India then significantly over-produces and ships that excess, underpriced rice across the world.

There is a direct link between unfair trade practices and emergency assistance for U.S. agriculture. This is a point we believe the trade officials in Trump 2.0 will see clearly.

As of this writing, Jamieson Greer has been nominated to be the next U.S. Trade Representative. Mr. Greer was the chief of staff to President Trump’s former USTR, Robert Lighthizer, who was keenly aware of the important role agriculture plays in trade and the degree to which market manipulators can make trade unfair and threaten honest U.S. producers. We are encouraged that as an alumnus of the first Trump Administration and a supporter of agriculture, future Ambassador Greer will follow-through on several key initiatives that support our industry.

We head into the new Administration with many opportunities that bring with them their own challenges. We caution against all out trade wars and look forward to working with the Trump Administration on trade initiatives and if necessary, targeted tariffs that would level the playing field for our producers. Welcome back to Washington, Mr. Trump. 

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