Under the Dome

‘It really hits North Carolina’: China goes after tobacco in latest tariff fight

WASHINGTON — A trade war with China could have devastating impacts on North Carolina’s tobacco farmers.

North Carolina exported more than $156 million in leaf tobacco to China in 2017, making the nation the largest consumer of the state’s tobacco in the world. That number is already down from more than $184 million in 2015 and $166 million in 2016, according to U.S. Census data.

On Wednesday, as part of a quickly escalating trade war with the United States, China announced plans to impose 25-percent higher tariffs on more than 100 U.S. products. The list includes several different tobacco products as well as soybeans. Earlier, China announced tariffs on pork products from the U.S.

Tariffs on unmanufactured tobacco would rise from 10 percent to 35 percent, while duties on cigarettes and cigars would climb from their current 25 percent to 50 percent, according the U.S. Department of Agriculture.

“This is troubling, to say the least, in terms of tobacco,” said Larry Wooten, president of the North Carolina Farm Bureau. “When you add pork and soybeans, it really hits North Carolina.”

China has seemingly targeted its tariffs to impact states that voted for President Donald Trump, adding not only tobacco but corn and soybeans (Iowa), whiskey (Kentucky) and vehicles (Michigan) on its most recent list for tariffs.

In addition to being the nation’s largest producer of tobacco, North Carolina plants 1.6 million acres of soybean. North Carolina exported $2.3 billion in goods to China in 2016 up from $1.4 billion in 2006, according to the US-China Business Council. China was the state’s third-largest trading partner, trailing Canada ($6.2 billion in goods) and Mexico ($3.1 billion).

“I don’t think we would look favorably on something that would hurt not only agriculture but other industries. The technology industry is a large exporter from North Carolina,” said Tony Copeland, North Carolina’s Secretary of Commerce.

North Carolina exported $213 million in semiconductors and components to China in 2016, according to the US-China Business Council.

Trump announced tariffs on imported steel and aluminum last month and then announced more tariffs on $50 billion of Chinese goods on Tuesday. China responded quickly. Trump seemed defiant, claiming on Twitter that the U.S. was not in a trade war with China because we have already lost.

Sampson, Johnston and Nash counties are among the largest tobacco-producing counties in the state. Wooten said North Carolina produces about 50 percent of the nation’s tobacco and exports about 75 percent of the tobacco it grows.

The tariffs are just proposed at this time and will not go into effect until at least the middle of May, leaving time for negotiations between the two nations. Zippy Duvall, president of the American Farm Bureau Federation, urged the nations to negotiate and “produce an agreement that serves the interests of the world’s two largest economies.”

Sen. Richard Burr, a Republican from Winston-Salem, said that he opposes tariffs but supports punishing the Chinese for unfair trade practices.

“Listen, I don't like tariffs. I have openly said that my entire career. But fair trade agreements are what we should shoot for. When the Chinese close their market place to certain US products, when China continues to ignore intellectual property, then sometimes you have to use a different tactic, and I think clearly that is what the president is doing,” Burr said Wednesday in Durham County.

“My hope is that they will negotiate a settlement before the first tariff takes place, but at the end of the day that means our product goes into China as easily as Chinese products come into the United States.”

Wooten said his group would work hard to convince officials of the serious consequences for the farm economy in North Carolina.

“If this were to continue and go into effect, it could impact the incomes of our farmers in a very direct way,” he said. “We’re going to be working hard to say this is really problematic for American agriculture.”

Americans for Prosperity, a conservative group backed by the billionaire Koch brothers, called for an end to trade protectionism.

“The back and forth escalation of trade protectionism will be felt by American businesses, families and workers just beginning to feel the benefits of tax reform and a thriving, post-tax reform economy,” Americans for Prosperity President Tim Phillip said. “Tariffs punish those Americans with higher costs, which undermines tax reform, destroys jobs and weakens the economy. It’s hard to imagine a more counterproductive and self-destructive policy.”

Brian Murphy: 202-383-6089, @MurphinDC