Tariffs in Agriculture

A few weeks back, Donald Trump implemented a tariff on imported steel and aluminum that instantly sent the free market capitalists and agricultural community into a head spin. Uncertain as to what the tariff’s will actually accomplish, Trump’s economic advisor immediately resigned following the announcement after spending, or wasting, most of his tenure trying to block those exact tariffs.

Not surprisingly, Trump ran on a nationalist agenda that included closed borders, torn up trade agreements, and U.S. industry protectionism. Some in the Republican party saw the nationalist agenda as a ways to the end, but Trump has demonstrated since then that he intends to execute that agenda in part or full with the withdrawal from TTP, the renegotiation of NAFTA, and now with tariffs.

The impacts of how tariffs will affect agriculture seems to be a topic of great discussion and speculation in the agricultural community and may have severe impacts on Montana farmers who ship grain and beef overseas. Most steel and aluminum imported to the U.S. come from Europe, Brazil or China. Much of the exported grain and beef go to similar markets. The fear is that a trade war, or series of increased tariffs would have disastrous consequences on those agricultural exports.

As the Northern Ag Network reported, the U.S. Wheat Associates fear a trade war, saying, “We have repeatedly warned that the risks of retaliation and the precedent set by such a policy have serious potential consequences for agriculture. It is dismaying that the voices of farmers and many other industries were ignored in favor of an industry that is already among the most protected in the country.”

Beef has similar concerns. The Northern Ag Network cited Kent Bacus, NCBA Director of International Trade and Market Access as saying, “Exports and open access to foreign consumers are vital to American cattle producers. Ninety-six percent of the world’s population lives outside the United States, and our sales to foreign consumers account for roughly $300 per head. That value translates to higher incomes for our producers and the rural economies they support. There’s a very real possibility that today’s action could spark retaliation against American beef producers in the form of higher tariffs and the return of arbitrary non-tariff barriers.”

Other concerns arise not just from a trade war, but from artificially inflated prices. Some farmers have shown concern that steel prices could rise, leading to rising implement prices, and ultimately more overhead for farmers. This could exacerbate the already anxious community if a trade war does reduce exports.

The real question remains why? Why did Trump place the tariffs on steel and aluminum and who does he hope to help by causing a trade war? The answer is uncertain, and really most of the impending results will be up in the air until it is clear how other countries will react to the news of tariffs, and whether they respond in kind.

It does continue to fit into the President's campaign promises of an America-First agenda. It just seems to come down to which America comes first. Until then, it will be one more anxiety on farmers who are already suffering under last years drought and this years calving season.