With the United States and China engaged in tariff threats, cotton and grain sectors are nervous – and are watching carefully – as the situations around proposed tariffs are uncertain.
With the recent announcement from China about a proposed 25% tariff on 106 products from the United States, key agricultural commodities like cotton, soybeans and sorghum may be impacted.
More importantly, in the High Plains of Texas, which is the ground zero for the U.S. cotton industry with planting of cotton just around the corner, the situation may affect the planting intentions and, hence, impact the broader economy of the region.
Speaking at the 61st annual meeting of Plains Cotton Growers, Inc. in Lubbock, U.S. Representative Jodey Arrington, who represents the 19th Congressional District in the High Plains area, emphasized the importance of a level playing field for U.S. trade.
While supporting the proposed tariffs by the United States to safeguard America’s interest, Arrington stressed that executing those policies are more important. Outlining some of the recent successes to protect the cotton industry, such as the recognition of seed cotton in the Title 1 of the current Farm Bill and the ginning assistance program, Arrington stated that free and fair trade are linked, and that more free trade agreements are needed to open new markets.
The sorghum industry – another important agricultural commodity grown in the High Plains of Texas – may also feel the impact if the tariff proposal becomes reality.
“Trade must be fixed, but farmers should be protected,” stated John Duff, strategic business director of Lubbock-based National Sorghum Producers. Last year, the U.S. exported 189 million bushels of sorghum to China – or about 78% of total sorghum exports from the United States. China is a significant market and a growing consumer society, and there is demand for protein and quality cotton.
Steve Verett, executive vice president of Plains Cotton Growers, said, “Export markets are extremely important to U.S. cotton producers, and up to 80% of U.S. cotton is sold into export markets around the world, including China. The potential for current or future trade disputes to impact or redirect the flow of U.S. cotton is very real, and it is a situation that we are monitoring closely.”
The tariff issue clearly highlights the point that one-size-fits-all does not work, as it is evident with the impact it may have on the U.S. agriculture sector, unlike its manufacturing sector.