President Donald Trump has long discussed the need to impose tariffs on international trading partners in an effort to generate more revenue and bring more manufacturing back to the United States.
But until his recent so-called “Liberation Day”, when he announced the full scale and scope of the tariff strategy, we didn’t know exactly which countries and products would be impacted.
Now we know that dozens of countries will face a 10% baseline tariff on nearly all products, with just a few exceptions, and many will also face higher tariffs up to 50%, starting April 9. These new reciprocal tariffs will be in addition to product-specific tariff rates that were already in place, which the president said reflected both tariff and non-tariff barriers applied to U.S. exports in their markets.
“That means they do it to us and we do it to them. Very simple,” Trump said. He added that the rate was “discounted” from the rates those countries charge.
China is set to face reciprocal duties of 34%, while the European Union will face a rate of 20%, Japan 24%, India 26% and South Korea 25%. These duties include the 10% baseline tariff.
Canada and Mexico, which have already been hit by new tariffs since Trump took office, will not be affected by the new actions, according to the White House fact sheet.
“In the event the existing fentanyl/migration IEEPA orders are terminated, [U.S.-Mexico-Canada Agreement] compliant goods would continue to receive preferential treatment, while non-USMCA compliant goods would be subject to a 12% reciprocal tariff,” the fact sheet reads, referring to the International Emergency Economic Powers Act.
Some exemptions
Certain agriculture inputs will be exempt from the 10% across-the-board duties and higher reciprocal duties applied to specific trade partners, according to a detailed list of carveouts published by the White House.
Listed among the 37 pages of products excluded from the steep new duties are potash, certain herbicides and pesticides, peat, lumber products, lubricating oils, some energy products, and certain pharmaceuticals, including tranquilizers and vaccines for veterinary use. Diquat and paraquat are among the herbicides listed.
Representatives from the agriculture industry as well as farm-state lawmakers have been pushing the administration in recent weeks for a slate of exemptions to any new duties. AmericanHort, an industry group representing the horticulture industry, had appealed to Agriculture Secretary Brooke Rollins for a carveout for peat moss, for example.
U.S. agriculture depends on countries like China and India for many widely used pesticides. The U.S. imports more than 19 million kilograms of paraquat each year, according to Department of Commerce Data, and more than 3 million kilograms of diquat. Paraquat also received an exemption from tariffs imposed during Trump’s first administration.
While the exemptions apply to the new 10% duties and reciprocal tariffs set to go in, the list does not apply to the 25% tariffs already in place on Mexico and Canada, even though Canada is a major U.S. supplier of some of the articles listed.
The U.S imports around 90% of its potash, with Canada alone making up about 80%. Canadian potash that qualifies for duty-free treatment under the U.S.-Mexico-Canada Agreement can still enter the U.S. without being subject to duties. Imports that don’t qualify for duty-free treatment will still be subject to existing 10% duties imposed under the executive order related to Canada’s tariffs.
But if those tariffs are lifted, these exemptions would apply to the reciprocal tariffs Canada and Mexico would face, according to the executive order.
Ag industry representatives had been calling for exemptions to fresh produce and food products that the U.S. does not produce domestically, but none were included in the list of exempted products.
These exemptions “were hard fought for by agricultural organizations,” the American Farm Bureau Federation’s economist Betty Resnick wrote in an analysis published Friday, and “are a testament to the effectiveness of farmers and ranchers raising their collective voice.”
Even if the exemptions provide some price relief on critical inputs, they will do nothing to soften the blow of any retaliatory tariffs imposed by foreign governments. China responded to the new duties with a 34% tariff on all American exports on Friday, matching the U.S.’ latest tariff maneuver. The tariff is set to kick in April 10, according to a statement from China’s Ministry of Finance.
“The U.S. practice is inconsistent with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice,” the statement reads. “China urges the United States to immediately cancel its unilateral tariff measures and resolve trade differences through consultation in an equal, respectful and mutually beneficial manner.”
China’s customs agency also suspended imports from U.S. sorghum and grain exporter C&D, and three poultry and bonemeal companies. Beijing also challenged the tariffs at the World Trade Organization.
The European Union has also said it is assembling countermeasures.
“With the simultaneous increase of input prices and decrease in demand, farmers who are already in financial distress will further feel the squeeze,” the ABFB analysis argues.
USDA mulls financial aid
Rollins has been trying to reassure farmers and ranchers that Trump’s tariff strategy is in their long-term best interest and that he’ll look out for them if economic assistance is needed.
“Hopefully our farmers and our ag community won’t be hurt … at least in the short term by these decisions, but if they are, the president’s commitment is the same today as it was five or six years ago,” Rollins told reporters during a tour of Iowa agriculture last week.
She was referring to the $23 billion in Market Facilitation Program payments the U.S. Department of Agriculture distributed during Trump’s first term.
Rollins said any new compensation package will be “determined based on what happens in the next weeks and months.”
Editor’s note: Sara Wyant is publisher of Agri-Pulse Communications, Inc., www.Agri-Pulse.com.
