As of this writing, President Donald Trump’s reciprocal tariffs are still set to take effect April 2.
“April 2 is a liberating day for our country,” Trump said to reporters March 17 on Air Force One. “We’re getting back to some of the wealth that very, very foolish presidents gave away because they had no clue what they were doing.”
Trump has said he is using tariffs for several different reasons, some of which are at cross purposes with each other. One of his stated reasons for imposing tariffs is to incentivize behaviors not related to trade, such as Mexico tightening border traffic to control fentanyl smuggling. But he has also said he wants to correct long-standing imbalances and in equities in the tariffs imposed on United States goods by our trading partners.
America’s farmers have generally favored the post World War II free trade regime of low tariffs and have protested when our trading partners have protected their own markets and ag producers. Our producers and their advocacy groups have patiently waged long-term, behind-the-scenes campaigns to get other countries to open their markets to our ag products.
In theory, free trade was supposed to be good for everyone.
But as Yogi Berra was reputed to have said, “In theory, there is no difference between theory and practice. In practice, there is.”
Broadly speaking the president is correct about our tariffs to date being unbalanced. European Union countries have long imposed tariffs of 10% on American cars, while their cars enjoy much lower tariffs of 2.5 to 3.5% when they are shipped to the U.S. Just about all European countries protect their own farmers and ag producers with unequal tariffs, even when they profess to be free-traders in other areas.
So there may be a case, at least, to be made for Trump’s reciprocal tariffs.
But one thing everyone agrees on, regardless of their stance on tariffs per se: the constant shifting back and forth on tariff policy is terrible for markets, creating uncertainty and freezing investment decisions. Markets, businesses and farmers hate uncertainty and unpredictability more than anything.
Farmers have to cope with enough unpredictable weather each day, even during “normal” times, without adding to the uncertainty. Our hope is tensions ease so farmers and ranchers and the businesses that support them can return to a sense of stability.
David Murray can be reached at journal@hpj.com.
