By Clint Thompson
Tariffs are one of the more controversial topics being handled by the Trump Administration. Since it involves the United States’ current trade relationships with China, Canada and Mexico, it’s helpful to understand what they are and their impact on Southeast agriculture.
Adam Rabinowitz, Alabama Extension economist, highlighted tariffs and why they are implemented. His main concern are retaliatory tariffs.
“When we put tariffs on imports that come into this country, then we are effectively saying that whatever price is being paid, there’s going to be this tax, this additional price that’s going to have to be paid for those goods coming into the country,” Rabinowitz said. “Ultimately, it converts to higher prices to consumers and the impact on agriculture, what we saw from the first Trump administration, the big impact on agriculture came from retaliatory tariffs. The U.S. did not put tariffs on agricultural products initially when tariffs were put on China, but China retaliated by saying they would put tariffs on agricultural products. Ultimately it makes those products more expensive.
“Our exports, when they put those retaliatory tariffs on, became more expensive, and Chinese buyers went looking to Brazil. They were able to get cheaper.”
Rabinowitz said tariffs are implemented to provide certain protections and help encourage the growth of a particular industry. But there are ramifications as farmers saw during Trump’s first term.
“Certainly, pecans did take a hit; cotton as well. Soybeans, those were pretty significant. There are certainly concerns with Mexico coming into the conversation now in tariffs, it’s a question of whether corn might be impacted as well. Peanuts would be another one in terms of exports to Mexico and Canada,” he added.
American Farm Bureau Federation Letter
The American Farm Bureau Federation expressed concern in a letter to Trump in late January that any new tariffs against Canada, Mexico and China may inadvertently create financial hardships on producers.
“Last year, the U.S. exported over $30 billion in agricultural products to Mexico, $29 billion to Canada and $26 billion to China – our top three markets by value combined for half of total agricultural exports,” the letter states. “Any effort to impose additional tariffs on these nations’ imports runs the risk of significant retaliatory measures against U.S. agricultural exports. We ask that you carefully consider the impact on American farmers and ranchers, associated businesses and rural communities when determining potential trade actions. For decades, American agriculture has strongly supported efforts to open the world to our agricultural and other trade products.”
Click here to read the letter.