Former President Donald Trump is promising to renew his attack on the U.S. trade deficit, should he win a second term, by imposing an across-the-board tariff on imports, a prospect that is alarming to farm groups still pained from his past trade wars.
Trump also has pledged to end China’s normalized trade relations with the United States, a position shared by his two leading challengers, Florida Gov. Ron DeSantis and former South Carolina Gov. Nikki Haley.
But Trump’s call for a broad “baseline” tariff on U.S. imports from around the world goes well beyond what his challengers have suggested, and some farm groups fear such duties would provoke other countries to retaliate against U.S. ag imports, much as China and the European Union did when Trump targeted them with tariffs during his administration.
“The concern for retaliation definitely is real,” said Tracey Chow, who follows trade policy for the Western Growers Association.
While many in agriculture and elsewhere were skeptical Trump would carry out the trade policy he proposed during the 2016 campaign, Chow said “he really did lean into exactly what he said that he was going to do, and so he weaponized tariffs to a certain degree that really upended a lot of the trade markets that we had.”
Virginia Houston, director of government affairs for the American Soybean Association, said her group opposes the use of tariffs or other market access barriers as a trade negotiating tactic because they “could precipitate retaliation against soybeans or soy-based exports. So, whether that's a candidate’s proposal, a congressional proposal or administrative proposal, we are opposed to the use of tariffs as a negotiating tool.”
Trump hasn’t provided details for his baseline tariff concept, including the legal authority he thinks he has to implement the duties. But his campaign website makes clear that the tariffs are intended to be broadly applied to imports.
Trump “will impose tariffs on FOREIGN producers through a system of universal baseline tariffs on most imported goods,” the website says. “Higher tariffs will increase incrementally if other countries manipulate their currency or otherwise engage in unfair trading practices.” Trump’s campaign didn’t respond to a request from Agri-Pulse to discuss his trade policy.
During an interview with Fox Business in August, Trump offered the figure of 10% for the baseline tariff. Trump’s former trade ambassador, Bob Lighthizer, told the New York Times in a recent interview that the baseline tariff would be imposed on top of existing duties – so a tariff that’s now 5% would be increased to 15%.
Lighthizer also told the Times the size of the U.S. trade deficit gives the president “clear authority” to impose tariffs under either the International Emergency Economic Powers Act or Section 338 of the Tariff Act of 1930.
Joe Glauber, a former chief economist for USDA who is now at the International Food Policy Research Institute, said a 10% across-the-board tariff would almost “immediately trigger countermeasures by most of our large trading partners.”
U.S. ag exports would “be a big target” of those retaliatory tariffs, noting that the European Union also targeted American ag products as the result of Trump’s tariffs on steel imports.
Soybean growers were hit especially hard by China’s retaliatory tariffs in 2018, although the Trump administration ultimately compensated growers for the impact through the Market Facilitation Program, a series of payments funded out of USDA’s Commodity Credit Corporation. Congress lifted restrictions on USDA’s use of the CCC as the Trump White House was gearing up for the trade war.
China's 25% tariff on U.S. soybeans remains on the books but was suspended by the “phase one” agreement Trump reached with China in 2019.
A 2021 study by economists at the University of Georgia and the University of California, Davis, said the retaliatory tariffs “effectively drove a wedge into the world soybean market, lowering U.S. prices at Gulf export locations” by 74 cents a bushel for several months while raising Brazilian prices by 97 cents a bushel.
U.S. ag exports to China fell from $21.9 billion in 2017 to $10.1 billion in fiscal 2018 but eventually reached $33.4 billion in FY21 and $36.2 billion in FY22, according to USDA data. In addition to the phase one deal, an outbreak of African swine fever that devastated Chinese hog production also helped bolster U.S. exports to China significantly.
Chow said some specialty crops affected by Chinese tariffs, including grapes and walnuts, have never fully recovered from the trade war. She said the exact impact of the retaliatory tariffs is difficult to quantify because of other factors, including supply chain disruptions.
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“As we've always seen, not even just obviously under the Trump presidency, but even historically, ag is always at the tip of the spear when it comes to retaliation,” she said.
Going forward, the Trump campaign also promises to “completely eliminate U.S. dependence on China – the primary beneficiary of Democrats’ globalist agenda.”
The idea of ending China’s permanent normal trade relations has been catching steam with Republicans in and out of Washington.
A special House committee last month issued a series of recommendations on China policy but stopped short of calling for revoking PNTR, which provides limits on tariffs, but still recommended raising tariffs on Chinese exports while taking steps to protect U.S. farmers from the trade retaliation that would likely result.
The House Select Committee on the Chinese Communist Party said China should be moved to “a new tariff column that restores U.S. economic leverage.” The report said the tariff increase should be done “over a relatively short period of time” to prevent “avoidable disruptions.”
During a speech to the American Enterprise Institute last June, Haley called for revoking PNTR as leverage to end the flow of fentanyl into the United States.
Haley praised Trump for using his presidency to challenge what was a “bipartisan consensus” that normal trade relations with China were “all reward and no risk.” She said Trump “was almost singularly focused on our trade relationship with China. He was right about trade abuses. It was and still is a critical issue. But Trump did too little about the rest of the Chinese threat.”
DeSantis said during a campaign stop in New Hampshire that the "asymmetric relationship between our two countries must come to an end."
The Iowa Farm Bureau Federation, which conducts a survey of candidates in the Iowa caucus, which takes place Monday, asked candidates whether they would support “free trade agreements that reduce tariffs and trade barriers” to ag products and inputs. Haley, DeSantis and Vivek Ramaswamy all said they would. The Trump campaign didn’t respond.
“As president, Iowa’s – and America’s – farmers will be my partners. I will focus on selling what our farmers are making because I want everybody to buy what we have,” said Haley.
“I will seek to expand market access for U.S. agricultural producers,” DeSantis said.
Ramaswamy said "free, bilateral trade agreements help open markets abroad to our goods and keep the cost of living low at home.”
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