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May 22, 2022

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Tariffs continue to take toll on Pacific Northwest grain exports

Soybeans especially hit hard; impact to be felt widely, industry observers say

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LONGVIEW — Grain exports along the Columbia River System have dropped dramatically as a consequence of the tariff-based “trade war” between the U.S. and China, and regional officials are worried about the “trickle down” effect the decline might have.

“Everyone along the supply chain will be impacted: longshoremen, port revenues, (United Grain Commission) employees, transportation companies who move grain products,” said Augusto Bassanini, CEO and president for United Grain Corp., which is based in Vancouver.

The trade war started last summer, when President Trump first imposed a 25 percent import tax on $50 billion worth of Chinese goods. Shortly afterward, the U.S. added a 10 percent import tariff on another $200 billion worth of Chinese products.

Those increases resulted in retaliatory tariffs on U.S. goods imported to China, so businesses in both countries are paying more to import goods. And in some cases, the higher prices have deterred China from importing some commodities at all.

“From a wheat perspective, about a year ago when (the U.S.) started talking about implementing tariffs, China stopped buying wheat,” said Glen Squires, CEO of the Washington Grain Commission. “They didn’t wait until the tariff was applied. When there was just a threat of it, they stopped buying.”

The U.S. increased tariffs again this month, rising the rate between 10 percent and 25 percent on almost $200 billion worth of Chinese goods. Regional officials in the grain export market say the tariffs have taken the “most noticeable and dramatic” toll on soybean exports.

Soybean exports to China from the Port of Longview have declined 65 percent, said port spokeswoman Ashley Helenberg. Though Helenberg and Port Commission President Doug Averett noted that some of the decline is due to delayed rail traffic and recent weather conditions, port officials pointed to the trade war as a leading contributor to the loss of soybean exports.

In the 2018-19 fiscal year, the port exported more than 830,000 metric tons of soybeans to all countries during the harvest season, which runs September through March. That’s almost 60,000 tons less than was exported the previous year. (In total that harvest season, the Port of Longview exported about 2.3 million metric tons of soybeans.)

Grain represents 25 percent of the Port of Longview’s operating revenue, and wheat and corn remain strong commodities for export, officials said.

“Other than soybeans, we haven’t been hurt that much,” Averett said. “But if (the trade war) escalates and gets into steel … or other commodities we do, there will be a lot of issues with trucking and trains coming into the port, which would mean less local jobs.”

Averett said grain export facilities are “probably a little nervous at this point, and hoping (the trade war) can get resolved soon.”

Representatives with the Port of Kalama and the Port of Kalama grain terminals could not be reached for comment last week, and representatives with the Export Grain Terminal at the Port of Longview declined to comment.

Regionally, soybean exports are down about 70 percent since the 2017-18 harvest year, said Stephanie McClintock, spokeswoman with the United Grain Corporation.

Bassanini added that “China by far is the largest user of soybeans globally … and no other country has the same buying power.

An estimated 130 vessels will not be loaded out of Pacific Northwest ports due to the export decline, McClintock said. And those unloaded vessels won’t affect only ports, McClintock said.

“If we are not loading vessels, we don’t have the need for the employees that load those vessels. … There’s also less rail we need, so that’s less money for the rail lines,” she said. McClintock estimated that about 780 fewer trains carrying grain will move from North and South Dakota to the West Coast this year.

An estimate on how employment numbers might be affected was not immediately available last week, and the local Longshoremen’s union did not return request for comment.

And while farmers are being subsidized for their products to make up for some of the losses they’re enduring due to the newly imposed tariffs, those subsidies don’t always apply to the other businesses that are part of the grain export industry, McClintock said.

Decreased exports also mean a “historical soybean surpluses, which the marketplace will not be able to absorb,” Bassanini said. “Right now they sit on the farm, and they will stay there as long as the trade dispute is ongoing.”

The trade war could also have long-lasting effects, including severing ties to the soybean trading market in China that took years for the U.S. to build, said American Soybean Association President Davie Stephens. Stephens addressed that concern in a letter to President Trump issued by the ASA, the National Corn Growers Association and the National Association of Wheat Growers earlier this month.

“It took us more than 40 years to develop the China soy market. For most of us in farming, that is two thirds of our lives. If we don’t get this trade deal sorted out and the tariffs rescinded soon, those of us who worked to build this market likely won’t see it recover in our lifetime,” Stephens wrote in the letter.

In addition to soybean farmers, corn and wheat growers have also felt the pressure of the trade war. However, local ports have felt less of those effects because “China is not a big market for corn coming from Longview,” said Heleberg, the Port of Longview spokeswoman. “The most noticeable and dramatic hit is to soybeans,” Helenberg added.

As for wheat, regional exports are also down. Squires, the state grain commission CEO, said that the white wheat exports are down about 300,000 tons in the Pacific Northwest However, because China stopped importing U.S. wheat before the tariffs were fully imposed last year, Trump’s decision to up the tariff rates “doesn’t really do anything” to the current wheat exports, Squires said.

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