Opinion: Two sides of tariffs?

Even though polarization is everywhere in today’s politics, there are public policy areas with broad bipartisan agreement. For example, we all seem to agree that exports are good, but imports are bad: responsible for our declining Main Streets, the opioid crisis, and our present supply chain problems. If only we didn’t rely on foreign imports, we could revive that perfect past, when anybody could get a job on an assembly line that wanted one. Back then, we actually made things, and men were men.

And for all I know, it’s true. If we didn’t import things from China, maybe they wouldn’t be such an aggressive actor on the world stage. Self-reliance is not only a benefit in our private lives, but perhaps it should be the guiding light of our national policy as well. Although it is possible to take this self-reliance thing too far. After all, no country is more self-contained and less open to trade than North Korea, which I imagine is a small solace for its citizens, who, according to news stories, are sometimes reduced to eating grass. Locally grown grass.

While I’m listing issues with bipartisan agreement, we all know that concentration in markets is a bad thing. We rural folk are worried, with justification, that the big 4 packers are controlling the market for meat, driving down prices to farmers and increasing them for consumers. And everybody is concerned about huge tech companies, particularly Facebook and Twitter, who have an unhealthy control over social media.

So, maybe there is a chance that we can work together to solve our problems. Both the Biden administration and the Trump administration were and are big fans of tariffs, and neither has made any attempt to enter into multilateral trade deals. Both Democrats and Republicans have plans to break up big tech, or to enforce some kind of federal control over who says what on social media.

There is a problem when we decide that both monopoly and imports are bad. If we protect American firms from competition from around the world, we guarantee that our domestic markets are less competitive. Domestic firms will be larger and more powerful, less responsive to consumers, and prices will be higher than they would be without foreign competition. We can have competitive domestic markets, or build a wall around our economy, but we can’t have both.

Perhaps an example might be helpful. The federal government has decided that the domestic fertilizer market is threatened by companies from the less desirable parts of the world who are “dumping” their products on American farmers. We’ve instituted tariffs to make sure that our domestic companies aren’t facing unfair competition. Who could be against that? 

In this instance, farmers have some questions. The leading producer of phosphate fertilizer in the U.S. produces 70% of the phosphate mined in the U.S., and their earnings and stock price have benefitted mightily from the imposition of anti-dumping duties. At planting time in 2022, fertilizer costs were anywhere from 50 to 100 percent higher than in the spring of 2021. Tariffs aren’t the only reason for high costs. The raw materials for nitrogen fertilizer have increased in price, the war in Ukraine has led to disruptions in foreign trade, crop prices are high leading to more demand, and we’re seeing a general inflation that is driving up the price of everything. Tariff free imports would have tempered those price increases, 

The people who work at Florida phosphate mines are fellow citizens, and many of them live in small towns with declining main streets and their communities are no doubt facing many of the same problems that we face here in the depopulating areas of the Midwest. They would seem to be the perfect beneficiaries of a policy that protects domestic industries from foreign competition.

There is more to the story, however. The main beneficiary of the anti-dumping duties has 13,000 employees, according to their annual report. So, well over a million farmers and ranchers across the country are facing higher prices for one of their major inputs and millions more Americans will face higher food prices. All to protect the incomes of a few thousand employees and stockholders of a fertilizer company. Well, there are lobbyists in D.C. benefitting as well, as the company in question sent 1.49 million dollars to the Washington firm which helped secure the tariffs. 

Now, it’s important to note that nobody did anything wrong here. The company used existing laws to benefit their shareholders. Heck, they have a fiduciary responsibility to do exactly that. The lobbying firm did what lobbying firms do, and it’s a relief to know that we haven’t outsourced lobbying, but still rely on domestic influence peddlers. Nope, I don’t blame anybody here for what has happened, but I tell this story to help people realize just how complex these issues can be. Sometimes, supply chain problems and price increases are caused by reliance on suppliers far away. Sometimes, though U.S. consumers and producers can benefit from longer, more flexible supply chains and, dare I say it, imports. 

Blake Hurst is a farmer and greenhouse grower in Northwest Missouri.