Farm groups are imploring the Trump administration to use the stiff, new reciprocal tariffs as leverage to secure greater market access for U.S. producers, but some trade analysts warn that the tariff designs may not lend themselves to swift dealmaking.
Trump on Wednesday ended weeks of speculation about what form his broad new tariffs might take. In a Rose Garden address, he unveiled a new baseline tariff of 10% on imports from every trading partner, as well as higher individual rates for more than 60 countries.
In his remarks, Trump railed against foreign barriers to trade that had shut U.S. ag exports out of valuable markets – singling out barriers U.S. poultry exporters face in Europe, beef exporters face exporting to Australia and the high tariffs rice producers face when selling to China, South Korea and Japan.
“We are glad to see the administration focusing on long-time barriers,” Gregg Doud, president and CEO of the National Milk Producers Federation, said in a statement. “Tariffs can be a useful tool for negotiating fairer terms of trade.”
The National Cattlemen’s Beef Association also welcomed the focus on barriers to U.S. beef in global markets.
“President Trump is taking action to address numerous trade barriers that prevent consumers overseas from enjoying high-quality, wholesome American beef,” Senior Vice President of Government Affairs Ethan Lane said in a statement.
For his part, Trump and some administration officials have suggested they will use the duties, at least in part, to secure concessions from U.S. trading partners.
A senior White House official told reporters ahead of the tariff announcement on Wednesday that the administration is looking for partners to drop their non-tariff barriers on U.S. exports.
“That's where they need to go in order to resolve this national emergency,” the official said, adding that dropping tariff rates on their own will be insufficient.
But multiple analysts argued on Thursday that the tariffs’ design may not be conducive for effectively securing additional market access for U.S. ag exports.
And the Washington Post reported Thursday that internal talking points circulated by the White House instructs surrogates not to characterize the tariffs as a starting point for negotiations.
In the buildup to April 2, some trading partners had extended olive branches in an effort to secure an agreement to avoid new duties, according to Sarah Bianchi, who served as a deputy U.S. trade representative under President Joe Biden. The European Union, for example, announced a delay to retaliatory tariffs imposed after Trump hiked duties on steel and aluminum imports to allow more time for dealmaking. Vietnam and Israel cut the tariffs applied to U.S. exports and India scrapped a digital services tax on U.S. tech firms.
But after seeing the scale of the new tariffs, countries may feel political pressure to rethink that approach, Bianchi said during a Brookings Institution event.
“The numbers were so big that I think some people are going to have to recalibrate a little bit more,” Bianchi said.
Kansas Republican Sen. Jerry Moran also told Agri-Pulse on Thursday that the scale of the tariffs had taken him by surprise given the opportunities for dealmaking.
“I would have expected more targeted tariffs to meet the needs of where countries are taking advantage of us,” Moran said, “and perhaps a more modest approach in the amounts.”
Both Moran and Bianchi singled out some of the tariff rates on Southeast Asian nations as particularly surprising. Cambodia, for example, will face a reciprocal duty of 49%, starting next week. Vietnam and Thailand will see 46% and 36% tariffs, respectively.
“Lots of businesses moved from China to Southeast Asia, really because of the tariffs we did in the last Trump administration, and now we're tariffing them in significant ways,” Moran said.
Bianchi added that unlike the U.S. North American neighbors, these countries have another vast export market on their doorstep – China.
“They do need the U.S. market. They also need China,” said Bianchi, who is now a managing director at investment banking advisory firm Evercore. “Japan and Korea have to think about the same thing. I don't think our market dominates, … certainly in some areas.”
Accordingly, the U.S. needs to be wary of overplaying its hand, said Mary Lovely, a senior fellow at the Peterson Institute for International Economics.
She questioned whether a nation that has deep trade ties with China would race to cut a deal with the United States, when a new president will be in office in a little over three and a half years.
“Does the rest of the world really think, ‘Oh, I have to change all my structural things to maintain access to that market?’” she said. “Or do I decide to create my own trade agreements or go more deeply into the agreements that I have,” – including by deepening integration with China – she added.
The methodology used to calculate the tariff could further complicate negotiations, argued Lovely.
The White House has not released the underlying methodology used to calculate the country-specific tariffs. But the rate appears to be derived by dividing the U.S. trade deficit with each country by the country’s exports to the U.S., then halving it – as first pointed out on X by James Surowiecki, a financial writer.
Accordingly, it does not appear that the tariff rates reflect specific duties imposed, trade barriers maintained or unfair trade practices adopted by other countries.
“There's really no methodology there,” Lovely said. “It's like going to your doctor finding out you have cancer, and the basis for your medication is your weight divided by your age,” she added – riffing on a comparison made by U.S. economist Dean Baker.
Without a clear methodology for calculating the tariff rate, countries will be entering negotiations blind, without a clear idea of what concessions they can offer to lower the U.S. tariffs, Lovely told Agri-Pulse after the event.
Without the ability to point to clear economic data points partners will also be at the president’s whim, and that of his political base, as to how little or much a concession should lower the duty rate, she added.
“It's really a moving target,” Lovely said.
During the panel discussion, Lovely questioned whether the broad scope of the tariffs might also ultimately get in the way of dealmaking.
“What is the administrative capacity?” she asked.
Daniel Mullaney, who served as assistant USTR under both Trump and President Biden, was less concerned about the strain on administrative capacity of negotiating a slate of deals with U.S. trading partners at once.
“The U.S. government is pretty good at conducting simultaneous negotiations,” Mullaney, who is now a nonresident senior fellow at the Atlantic Council, told Agri-Pulse. “We've got a history of dealing with multiple negotiations at the same time.”
Countries subject to high tariffs, he argued, would also see merit in coming to the table to negotiate. They may feel the need to impose retaliatory tariffs first, he argued, but this would not prohibit simultaneous efforts to get the tariffs reduced.
“We'll see it’s still worth negotiating what a balanced agreement might be, because at some point down the road it may turn out that the tariffs are just economically too costly, and there may be a separate need to move to an arrangement that doesn't involve tariffs.”
Rebekah Alvey contributed to this report.
