On April 2, President Donald Trump declared that foreign trade and economic practices have created a national emergency, and his order imposes responsive tariffs to strengthen the international economic position of the United States and protect American workers.
According to WhiteHouse.gov, Trump is invoking his authority under the International Emergency Economic Powers Act of 1977 to address the national emergency posed by the large and persistent trade deficit that is driven by the absence of reciprocity in trade relationships and other harmful policies like currency manipulation and exorbitant value-added taxes perpetuated by other countries.
Using his International Emergency Economic Powers Act of 1977 authority, Trump will impose a 10% tariff on all countries that takes effect at 12:01 a.m. Eastern time April 5.
Trump will impose an individualized reciprocal higher tariff on the countries with which the U.S. has the largest trade deficits. Those countries include China, Mexico, Canada, and European Union. All other countries will continue to be subject to the original 10% tariff baseline. This will take effect at 12:01 a.m. April 9.
In China’s case, the goods imported from that country face a 54% tariff rate as a result of the reciprocal rate of 34% on top of existing 20% rates.
It should be noted countries also charge tariffs for products that come from the U.S. and many have indicated they will also impose additional tariffs on American products.
As expected, many in agriculture have diverse views. Grain farmers depend on global markets, and they are concerned tariffs will hurt sales.
Mark Nelson, director of commodities at the Kansas Farm Bureau, who was a presenter on Kansas State University’s Winning the Game webinar on April 2 spoke briefly about tariffs and potential on crop producers. The webinar was before Trump’s announcement.
“Tariffs are a tax,” Nelson said. “Economic theory suggests that the efficient use of resources, plus trade, results in greater prosperity for all.”
In the short run the uncertainty and concern over retaliatory tariffs can negatively impact perceptions of the U.S. economy and commodity prices, he said.
In the long run, Nelson believes it will be a negative for agricultural trade.
“The U.S. is demonstrating that we are an unreliable source, and our trading partners, as we speak, are working on infrastructure and forging agreements and relationships with our competitors.”
China has now opened improved docks on both coasts South America, he said. China has spent money to help the Brazilian government dredge and widen the Amazon River so the Chinese can get their big tankers farther up the river.
The Chinese have an agreement with Brazil to accept Brazilian grain sorghum, Nelson said. Five years ago, China did not accept grain sorghum from Brazil.
Farm organizations
Leaders in the American Farm Bureau Federation and National Farmers Union voiced concern about the impact on the bottom lines of farmers and ranchers and they urged quick resolution.
American Farm Bureau Federation President Zippy Duvall said a goal of a level playing field with international partners is important, but increased tariffs threaten the economic sustainability of farmers who have lost money on most major crops the past three years.
“More than 20% of farm income comes from exports, and farmers rely on imports for crucial supplies like fertilizer and specialized tools,” Duvall said. “Tariffs will drive up the cost of critical supplies, and retaliatory tariffs will make American-grown products more expensive globally. The combination not only threatens farmers’ competitiveness in the short-term, but it may cause long-term damage by leading to losses in market share.”
National Farmers Union President Rob Larew said farmers and ranchers will bear the brunt a global trade war.
The economic strain and uncertainty that farmers face have reached a breaking point, Larew said. “Without meaningful support and a commitment to fair trade policies, we will lose even more family farms, weaken rural economies, and ultimately drive up costs and limit choices for consumers at the grocery store.”
Fair trading relationships are important for stability and fair competition, Larew said, as he worried the administration’s action creates instability at the expense of family farmers.
Livestock’s take on it
Meanwhile, two livestock industry groups were more optimistic and said the tariff policies could produce benefits while another one was more measured.
Ethan Lane, senior vice president of government affairs at the National Cattlemen’s Beef Association, said for too long America’s family farmers and ranchers have been mistreated by certain trading partners around the world.
“President Trump is taking action to address numerous trade barriers that prevent consumers overseas from enjoying high-quality, wholesome American beef,” Lane said. “NCBA will continue engaging with the White House to ensure fair treatment for America’s cattle producers around the world and optimize opportunities for exports abroad.”
R-CALF USA CEO Bill Bullard applauded Trump’s universal 10% tariff on all imported goods stating that the tariffs are needed to reverse the ongoing and rapid contraction of both the U.S. cattle industry and sheep industry.
“Our nation’s cattle and sheep sectors are losing farms and ranches at an alarming rate, with census data showing our beef cattle operations disappeared at the rate of over 21,000 farms and ranches per year during the five-year period between the two latest censuses,” Bullard said. “Tariffs will help put an end to the globalists’ practice of using cheaper imports to reduce demand for domestic cattle and sheep, which causes domestic farms and ranches to fail.”
The ranch group is also asking for tariff-rate quota systems to complement tariffs. Tariff-rate quotas are limits set on the volume of imported beef or lamb that can enter the U.S. market.
R-CALF USA also asked for a tariff-rate quota system that would limit current beef imports by 1.5 billion pounds and substantially limit lamb imports to allow the domestic sheep industry to reclaim at least 50% of the domestic lamb market.
The ranch group also asked for a 25% tariff on imports of live cattle from Canada and Mexico.
In a NCBA release posted online , the organization noted numerous countries impose tariff and non-tariff trade barriers on American beef that inhibit export opportunities. For example,
- Australia has sold roughly $29 billion of beef to American consumers. Meanwhile, producers have not been able to sell $1 of fresh U.S. beef in Australia due to non-scientific barriers.
- Vietnam places a 30% tariff on U.S. beef while Australian beef faces no such tariff.
- Thailand places a 50% tariff on U.S. beef.
- The European Union places numerous non-scientific “Green Deal” restrictions on American beef, limiting market opportunities.
Leaders from the National Milk Producers Federation and the U.S. Dairy Export Council added tariffs can be a tool for negotiating fairer terms. Gregg Doud, president and CEO of the National Milk Producers Federation, said the administration’s focus on long-time barriers to trade in the European Union and India was a good example.
“In fact, 20% reciprocal tariffs are a bargain for the EU considering the highly restrictive tariff and non-tariff barriers the EU imposes on our dairy exporters,” Doud said. “If Europe retaliates against the United States, we encourage the administration to respond strongly by raising tariffs on European cheeses and butter. We also appreciate the president’s recognition of the sizable barriers facing U.S. dairy exports into the Canadian market.”
International trade is essential to U.S. pork producers—and to the communities where they live and support, was a theme noted by the president of the National Pork Producers Council.
“Our ability to trade freely is critical and vital,” said Duane Stateler, a pork producer from McComb, Ohio. “We trade with business partners, and those relationships depend on trust, certainty, and stability.”
America’s pork producers are engaged at the highest levels of government, in the U.S. and beyond. Today, and this week, more than 120 leaders in the pork industry will be in Washington, D.C., for direct, in-person meetings across the legislative and executive branches.
Regarding trade, pork producers are conveying industry priorities in three distinct subject areas, underscoring and emphasizing:
- The critical importance of international trade for pork production. The sector relies on more than 25% of pork production as exports of many distinct products to high-value markets across the globe.
- Rigorous opposition to retaliatory tariffs charged against U.S. products, including those affecting U.S. pork producers. Retaliatory actions against food, and pork, are the wrong approach to resolving trade disputes.
- Barriers to market access in many locations continue to impact the industry’s ability to serve the ongoing high demand for U.S. pork.
“America’s pork producers have long fought for free and fair trade, knowing that we can provide a high-quality, safe, affordable protein that is in demand,” Stateler said. “In that message—and that goal—we are unwavering.”
Dave Bergmeier can be reached at 620-227-1822 or dbergmeier@hpj.com.
