By Ryan Hanrahan
Bloomberg’s Josh Wingrove, Jennifer A Dlouhy, and Jenny Leonard reported Thursday that “President Donald Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners, raising the prospect of a wider campaign against a global system he complains is tilted against the US.”
“The president on Thursday signed a measure directing the US Trade Representative and Commerce secretary to propose new levies on a country-by-country basis in an effort to rebalance trade relations a sweeping process that could take weeks or months to complete,” Wingrove, Dlouhy and Leonard reported. “Howard Lutnick, Trump’s nominee to lead the Commerce Department, told reporters all studies should be complete by April 1 and that Trump could act immediately afterward.”
“Fresh import taxes would be customized for each country, meant to offset not just their own levies on US goods but also non-tariff barriers the nations impose in the form of unfair subsidies, regulations, value-added taxes, exchange rates, lax intellectual property protections, and other factors that act to limit US trade, according to a copy of the memo distributed by the White House,” Wingrove, Dlouhy and Leonard reported. “Markets reacted positively to signs the tariffs aren’t expected to start immediately.”
“‘I’ve decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America,’ Trump said in the Oval Office. ‘In almost all cases, they’re charging us vastly more than we charge them but those days are over,'” Wingrove, Dlouhy and Leonard reported. “Trump told reporters that he would enact import taxes on cars, semiconductors and pharmaceuticals ‘over and above’ the reciprocal tariffs at a later date.”
How Agriculture Will be Affected
Agri-Pulse’s Oliver Ward reported that “in a fact sheet accompanying the executive order, the White House singled out Brazil’s 18% tariff on U.S. ethanol compared to the U.S.’ 2.5%, in addition to the U.S.’ low applied average tariff on agricultural imports. ‘The farmers are going to be helped by this very much, because product is being dumped into our country,’ Trump told reporters in the Oval Office Thursday. He added that this executive order could be ‘the most important thing I’ve signed.‘”
“U.S. tariff rates are, on average, lower than many of its trading partners, particularly for agriculture products. Around 70% of all U.S. imports enter the country duty-free, according to the Congressional Research Service. The weighted average tariff applied to U.S. agriculture imports in 2023 was 4%; for non-agriculture imports it was just 2.1%,” Ward reported. “Meanwhile, Canada subjects agriculture imports to a weighted average tariff of more than 14%.”
“These low tariffs were intentional, however, as successive administrations prioritized lower food prices for consumers, Luis Ribera, a professor of agricultural economics at Texas A&M University, told Agri-Pulse,” Ward reported. “The approach was to preserve tariffs on agriculture products that the U.S. produces to limit competition to domestic industry, but to drive down tariffs on products the U.S. doesn’t produce, to reduce consumer prices.”
“‘We’re really good at producing the products that we’re good at producing, and then the rest we import. And we import with very low or no tariffs at all,’ Ribera said,” according to Ward’s reporting. “The strategy worked as intended. The U.S. spends the least on food as a share of national expenditures than any country on the planet, according to Agriculture Department data. Just 6.7% of consumer expenses went for food in 2023.”
AgWeb’s Jim Wiesemeyer reported that “key concerns from the agriculture sector” with reciprocal tariffs include “loss of export markets: Many farmers fear that countries like Japan, South Korea, Mexico, and the EU will retaliate by targeting U.S. corn, soybeans, pork, dairy, and beef exports,” “financial pressure on farmers: After years of trade uncertainty and declining commodity prices, new tariffs could push many farms to the brink of bankruptcy” and “global competitiveness: Other countries, such as Brazil and Argentina, could quickly fill the void in markets like China, permanently reducing U.S. market share.”
Experts Skeptical about More Tariffs
CBS News’ Kate Gibson reported that “Deutsche Bank analysts said in a research note earlier this week that proceeding with reciprocal U.S. tariffs poses ‘additional upside risks to the inflation outlook.'”
In addition, the Associated Press’ Josh Boak reported that “the tariff increases would be customized for each country with the partial goal of starting new trade negotiations. But other nations might also feel the need to respond with their own tariff increases on American goods. As a result, Trump may need to find ways to reassure consumers and businesses to counteract any uncertainty caused by his tariffs.”
“The United States does have low average tariffs, but Trump’s proclamation as written would seem designed to jack up taxes on imports, rather than pursue fairness as the United States also has regulatory restrictions that limit foreign products, said Scott Lincicome, a trade expert at the Cato Institute, a libertarian think tank,” Boak reported. “‘It will inevitably mean higher tariffs, and thus higher taxes for American consumers and manufacturers,’ he said. Trump’s tariffs plan ‘reflects a fundamental misunderstanding of how the global economy works.'”
Source : illinois.edu