Editor’s note: This is the first in a two-part series on trade tariffs.
Goldman Sachs economists last week warned the Trump administration’s trade war is damaging U.S. economic growth and raising consumer prices, and J.P. Morgan economists estimate the latest round of tariffs will cost American households up to $1,000 per year.
At the same time, more than 160 business groups — including the National Retail Federation and the Association of Equipment Manufacturers — urged President Trump to postpone all tariff hikes on Chinese imports, warning that price increases will likely hit consumers hard during the holiday season.
But the trade war clouds have a silver lining — and unexpected fallout — for Care and Share Food Bank, which supplies food to hunger relief organizations across southern Colorado.
“We’ve had a spike in food,” Care and Share President and CEO Lynne Telford said. “Now, it’s exciting from one standpoint in that we don’t have enough food, so we’re always trying to get more food. But this spike in food, it’s been 1.7 million pounds so far this calendar year — that’s the extra amount. That’s on top of what we would normally get.
“We’re not equipped for it or staffed for it, so we’ve had to really scramble. But we wouldn’t ever turn it away because this is food that people can use — and it’s really good food.”
The flood of food is coming from a U.S. Department of Agriculture trade mitigation program that, in May, was extended to bail out farmers hit by China’s retaliatory tariffs.
Under the program, farmers who aren’t able to sell their products overseas have their surplus — including fruits, vegetables, beef, pork, lamb, poultry and milk — purchased by the USDA. The USDA then distributes those products to food banks through The Emergency Food Assistance Program, or TEFAP, which helps supplement the diets of low-income Americans.
Most of the food coming in is perishable, Telford said, so Care and Share has had to get creative — and quick — about getting it out there. The nonprofit is struggling to keep up.
“One of the things that comes to us is milk, and that has to be turned pretty quickly,” she said.
Care and Share has done extra mobile food pantries, and sent extra food to partner agencies and local food pantries — which causes transportation issues, Telford said.
“Also we have a warehouse, so all that stuff has to be received and moved around the warehouse, and so that’s caused stress on our folks,” she said. “Now, we’ve tried to hire a temporary person but with unemployment so low, it’s really hard to get people right now.
“Our agencies are also impacted, because we’re asking them to take as much as they can give to their constituencies,” she added. “And then we’re paying overtime to our people in the warehouse — but we don’t know what else to do.”
Scrambling aside, Telford isn’t looking the gift horse in the mouth.
“The quality has really been great, and the variety that we’ve been able to offer people — we even have pistachios!” she said. “That would not be something you’d normally see in a food bank. It’s really great food, and we’re really grateful that we can get more food out to people who need it. But it’s definitely impacted our organization.”
Care and Share can’t quantify how much the spike is costing in extra warehouse hours or other efforts, Telford said, “because rather than measure that kind of thing, we’re just flat out, getting it done” — and she recognizes it’s a side-effect of the trade mitigation program that won’t last forever.
Kelly Brough, president of the Denver Metro Chamber of Commerce, agrees the program is only a short-term relief strategy.
“The real key is while there can be an upside in helping people who can use this food, the downside is that’s probably not a sustainable model for those farmers,” she said. “That’s an interim step to try to hold on.”
Would farmers be getting better prices from China than from bailout buying by the USDA?
“My guess is they absolutely would,” Brough said.
“I don’t have a financial number just for Colorado but I can tell you that when you look at [agricultural] exports just to China, in 2014 those ag exports were about $24 billion for our country. That was just China. Last year, it was $9.1 billion. And I promise you farmers and ranchers in Colorado are experiencing that same challenge.”
The U.S. exported $19.5 billion of agricultural products to China in 2017, according to the American Farm Bureau Federation, immediately before 2018’s retaliatory tariffs triggered that plunge to $9.1 billion.
“And those exports of those farm products to China — just in the first six months of 2019 — fell by another $1.3 billion,” Brough said. “So the speed, now, of the reduction in exports is growing as well.”
When China last month announced retaliatory tariffs on $75 billion of American goods, including agricultural products, National Farmers Union President Roger Johnson said President Trump’s trade war “is making things worse, not better.”
Effective Sept. 1, China raised tariffs on American pork from 50 percent to 60 percent and on soybeans from 25 percent to 30 percent. Tariffs on corn, wheat and sorghum are expected to increase from 25 to 35 percent beginning Dec. 15.
“It’s no surprise that China is slapping even more tariffs on American products,” Johnson said in a statement released by the NFU. “Every time Trump escalates his trade war, China calls his bluff — and why would we expect any differently this time around? And it’s no surprise that farmers are again the target. In just the past three years, U.S. soybean exports to China have fallen nearly 80 percent, and once these tariffs kick in, things are likely to get worse.”
Things were difficult for farmers well before the trade war, Johnson said, citing chronic overproduction, extreme weather events and higher temperatures caused by climate change.
“But instead of looking to solve existing problems in our agricultural sector,” he said, “this administration has just created new ones.”
In a statement released Sept. 3, American Farm Bureau Federation President Zippy Duvall said while farmers and ranchers are grateful for mitigation payments, “the Trump administration must focus on keeping the negotiations with China on course to resolve this trade war.
“For many, those [trade mitigation] payments are the single-most critical factor in their ability to stay in farming for a little while longer,” he said. “But let’s be clear: Those payments do not make them whole, especially with additional challenges from Mother Nature.
“Many farmers and ranchers cannot withstand continued uncertainty in trade. We must restore and expand markets.”