Proposed port fees could have ‘devastating consequences,’ Washington wheat growers warn

WASHINGTON – President Donald Trump has escalated his trade war, raising tariffs on Chinese goods to 145% last week even as he paused some taxes on imports from other countries. But another part of his administration’s plan to compete with Beijing’s influence could hit Washington state farmers even if they don’t send their crops to China.

In February, the Trump administration proposed charging millions in fees on shipping companies with Chinese-built vessels in an effort to incentivize shipbuilding in the United States. Two groups representing Washington’s wheat growers warned in a March 24 letter to U.S. Trade Representative Jamieson Greer that the added cost would be passed down to farmers.

“While we fully support the premise of addressing unfair trade practices and revitalizing the U.S. shipbuilding industry, we strongly disagree with the methods proposed, as they would have devastating consequences for U.S. agriculture, particularly for grain farmers in Washington,” wrote Casey Chumrau, CEO of the Washington Grain Commission, and Michelle Hennings, executive director of the Washington Association of Wheat Growers.

The Office of the U.S. Trade Representative did not respond to questions from The Spokesman-Review about the proposed port fees. Greer told the Senate Finance Committee in a hearing on Tuesday that he would heed feedback from farmers and other stakeholders before making a final decision.

“They’re a series of potential remedies that could be used to incentivize shipbuilding in the U.S.,” Greer said. “They’re not all going to be implemented. They’re not all going to be stacked. I think the president will look very carefully to make sure that we have the right amount of time and the right incentives to create shipbuilding here without impacting our commodity exports.”

In an email, Chumrau said purchases of U.S. wheat have already slowed amid uncertainty over tariffs and the proposed fees, which would range from $500,000 to $1.5 million each time a ship enters a U.S. port – something they typically do multiple times after crossing the Pacific. The fees would depend on how many Chinese-made vessels are in a company’s fleet, and they would apply even to non-Chinese companies and ships that aren’t built in China.

Washington growers are especially susceptible to increased shipping costs, which fall at least partly on producers. While roughly 50% of all U.S. wheat is exported, about 90% of Washington wheat is shipped overseas.

Washington accounts for about half of U.S. production of white wheat, the predominant variety grown in the Evergreen State. Over the past five years, the Philippines was by far the biggest export market for that crop, with more than a quarter of U.S. exports going to that country.

China was the fourth-largest buyer of U.S. white wheat in the past five years, after South Korea and Japan, buying an average of 536,000 metric tons per year. Those exports are likely to take a major hit after Beijing announced a 125% tariff on U.S. exports in retaliation for Trump’s tariffs, which have increased several times in recent weeks.

Hennings, whose association represents wheat growers across Eastern Washington, said rising costs of inputs such as fertilizer and equipment already have put major pressure on farmers, while commodity prices have fallen.

“Wheat farmers are price takers, meaning the commodity market sets the sale price,” she said. “Farmers cannot raise prices when their production costs rise. Wheat prices are now at 2019 levels, and average $1.50 below the cost of production in Washington. We do receive inputs from China, and tariffs could restrain our ability to get our products or drive costs higher, which then in return adds to an already stressed farm economy.”

Ryan Poe, a wheat grower in Hartline in Grant County, said low commodity prices and rising input costs have made it hard to break even in recent years.

“It just makes a guy nervous,” he said. “It’s definitely been a pretty challenging couple of years. For me, the unknowns of the tariffs are what are hard.”

Chumrau said her organization, a self-governing state agency that helps wheat and barley farmers market their crops, hasn’t asked Greer’s office for specific changes to the proposed fee but hopes it will be reconsidered. She suggested that the administration could create an exemption for agriculture or a long-term plan to increase U.S. shipbuilding capacity before implementing fees.

In their letter to Greer in March, Chumrau and Hennings emphasized that although Washington wheat is rarely the cheapest option and buyers choose it because of its quality, they are still sensitive to price. Adding to that cost with the proposed port fees, they said, would hurt farmers who are already struggling.

“With prices already below break-even,” they said, “Washington farmers cannot take another hit.”