“the White House is reportedly confronting a very different reality: one in which Trump’s trade war leaves many Americans worse off, with farmers likely to be hit the hardest.”
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“Agriculture Secretary Brooke Rollins told reporters last week that the White House has asked her to “have some programs in place that would potentially mitigate any economic catastrophes that could happen to some of our farmers” as a result of a trade war.”
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“The time to work that out might be running short. Trump has promised to ramp up his trade war with Mexico and Canada in early April, and the administration also plans to start slapping so-called “reciprocal tariffs” on imports from other countries on April 2. As the various trade wars escalate, farmers are likely to be on the front lines—because American agricultural exports are an easy target for retaliatory tariffs from other countries.”
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“That’s exactly what happened during Trump’s first term, when his trade war with China caused American farmers to lose a sizable chunk of one of their largest export markets. When farmers complained about it, the Trump administration provided a $28 billion bailout via a New Deal–era program at the Department of Agriculture.
Some of that is already happening. In response to tariffs imposed by Trump in February, China slapped new tariffs on a wide range of American farm exports, including beef, chicken, corn, cotton, dairy, fruits, pork, soybeans, and various vegetables. Both Canada and Mexico have indicated that they plan to retaliate against American tariffs with new levies targeting American agricultural goods.”
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“That’s the nasty thing about trade wars. Not only do they harm manufacturers and consumers seeking to buy raw materials and finished goods from abroad, but they also harm domestic producers (like farmers) who lose access to foreign markets and therefore earn less money. Tariffs hurt Americans who want to eat avocados from Mexico, and Americans growing soybeans to sell there. There are a lot more losers than winners—and that’s before taxpayers get put on the hook for bailouts.
There should be no taxpayer-funded bailouts for American farmers who get burned by Trump’s trade wars. If the White House is concerned about the consequences that higher tariffs will have on American agriculture, there is an easy solution: Don’t impose them.”
“In a near party-line vote.., the House of Representatives blocked the most direct pathway for lawmakers to revoke the emergency executive powers Trump used last month to impose tariffs on goods from Canada, Mexico, and China. That change helps further cement executive control over trade policy and creates additional challenges for lawmakers seeking to claw back some control over tariff decisions.”
“The markets understand the basic truth about tariffs, which are taxes consumers in our country pay for imported goods. They raise prices, reduce our access to foreign goods and spark reciprocal tariffs that then punish our country’s farmers and manufacturers. They lead to less growth and more unemployment. They increase bureaucracy by requiring officials to calculate duties and enforce them. They create hostilities and have led to actual war.
As economist Robert Higgs explains, “Fiscally, protectionism is a poor source of government revenue that dries up completely as tariffs are increased so much that they reduce trade flows to zero. Morally, protectionism is vicious because it coercively substitutes the ill-informed and ill-directed judgment of government officials for the judgment of people making deals with their own private property.””
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“Trump threatened them to gain ill-defined concessions from our friendly, highly developed and peaceful allies to the north. Then, after it was clear Canada had already conceded to whatever it was our president demanded, he suspended them. His supporters claimed tariff critics didn’t understand that this was just a brilliant negotiating tool. But then this month the president imposed them anyway. True to form, MAGA shifted back to arguing that tariffs are great policy in and of themselves.”
“What Lutnick is talking about is central planning, plain and simple. It’s also just silly. How much of America’s aluminum supply should come from Canada if not 60 percent? Is 50 percent the right amount? Is it 17.54 percent? Lutnick doesn’t know—because no one does—because that’s a question without an answer.
Clearly, however, the Trump administration wants the figure to be lower. New 25 percent tariffs on aluminum imports might accomplish that, but at significant cost to American consumers and businesses, whose only offense is buying aluminum from sources located within a country that is a close American ally and the signatory of a trade deal that the current president negotiated just five years ago.”
“Any hope of robust economic growth resulting from unleashing energy abundance, deregulating the private sector economy, or pro-growth tax policy may now be doused by the economic fallout of a pointless trade war.
It started as a murmur—a slight downward revision, nothing alarming. But within five days, the Federal Reserve Bank of Atlanta’s GDPNow forecast for the first quarter of 2025 went from mild optimism (2.3 percent growth) to outright recessionary territory (-1.5 percent). By March 3, the number had plunged to -2.8 percent, the kind of contraction that doesn’t just signal weakness but outright economic distress. Eight months of stock market gains were wiped out in less than four weeks.”
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“Global supply chains are rattled, businesses are reluctant to invest in capital, and consumers are cutting back on purchases. Tariffs—pitched as a way to bring jobs back—have instead choked growth. The administration’s bet that protectionism would insulate the economy from foreign competition is proving to be precisely the opposite: a self-inflicted wound.”
‘Trump’s tariffs are short term pain for long term pain.
Tariffs will raise the price of the dollar, making U.S. exports more expensive. Other countries retaliate, making U.S. products more expensive. Raising the costs of inputs for U.S. outputs makes American products more expensive. This all hurts exports. These tariffs aren’t an export strategy, they are a self-reliance strategy, and self-reliance means a much smaller economy.’
“Tariffs on Chinese goods like manufactured parts and chips “are going to make the production process more complicated and more expensive,” said economist Christopher Thornberg with Beacon Economics.
Thornberg said California companies that rely on those materials like Apple and Nvidia, which makes highly sought-after chips essential for training AI programs, will be able to absorb the costs “because of the mountain of profits they are sitting on.”
The longer the trade spat goes on, though, the more likely knock-on effects like higher consumer prices, but also bites out of the budget, become as companies absorb increased costs.”
“The trade deficit is huge. It stands at $235.6 billion — a 12.9 percent increase since 2023. EU countries impose an average 5 percent tariff on U.S. goods, while the U.S. imposes an average 3.3 percent tariff on European goods. Even worse, the EU collects a 10 percent tariff on car imports — that’s four times America’s 2.5 percent.”
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“This has to change — and it can — but not through a tit-for-tat race to higher tariffs. Rather, we need to lower tariffs and observe symmetry. Ideally, EU-U.S. trade would be tariff-free. However, if that’s unachievable, tariffs should be, on average, 2 percent on both sides. That would create a huge stimulus for both economies, and it could be the basis and precondition for what is existentially necessary: a common trade strategy on China.”
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“If Trump is serious about “America First,” there’s one thing he should come to terms with — it shouldn’t mean “America Alone.” More leverage at the negotiating table with China, a healthy U.S. economy without inflation, and a prosperous Germany that could turn around a stumbling EU would be in the interest of the American people and Europe.”