Dem
47
GOP
53
For weeks, Republicans in Congress have been telling their constituents that Donald Trump's threatened tariffs were just a brilliant negotiating tactic and he wasn't going to do it. But now that he has actually shot the hostages, the reality is seeping in. Retaliatory tariffs are hitting agriculture first because Canada, Mexico, and China all know that Trump's base contains many farmers in red states and they will feel the sudden competition from cheaper imports from Brazil and other countries the most. Big Ag, which supports Trump, will also feel the hit. Canada, for example, has put tariffs on $20 billion worth of U.S. goods, including poultry, beef, fish, and yogurt. So, the tariffs are now putting Republican politicians in a difficult place.
During Trump v.1.0, farmers lost $26 billion from retaliatory tariffs in 2018-19 when duties were slapped on soybeans, sorghum, and pork. Trump dealt with this problem by getting Congress to pony up $28 billion in free money for the farmers. With a smaller majority in the House now and plans for big tax cuts for the wealthy in the works, getting the votes of all the deficit hawks in the House for a new bailout might not be so easy.
Trump understands the problem and even has a solution. On his boutique social media site, he posted the message: "Get ready to start making a lot of agricultural product to be sold INSIDE of the United States." So he is telling farmers to sell more poultry, beef, fish, and yogurt to cash-strapped Americans. In an indirect way, it might work. If the domestic market is suddenly flooded with products that were previously sold abroad, prices may go down. That will make consumers happy, but if farmers end up selling as much product as last year, only at lower prices, they will not be happy. A chicken farmer who gets 10% less for his chickens is going to be very unhappy and might just mention this to his senators and representative. A consumer who sees that chicken is now 10% cheaper might buy more chicken and less pork, which will not make the hog farmers in Iowa happy.
These tariffs are going to put Sec. of Agriculture Brooke Rollins on the spot. She doesn't have any particular affinity with farmers. She is a lawyer who ran a conservative Texas think tank for 15 years then had several (nonagricultural) roles in Trump v1.0. Her big issue is criminal justice reform, not chicken exports. She does have connections with Big Ag though, and supports policies that would allow corporate factory farms to increase production to the detriment of the environment, climate, small farmers, and rural communities. But her friends in Big Ag won't be happy with the tariffs either and will demand that she do something about them.
Economists estimate that the retaliatory tariffs will cost the average household at least $1,600 per year, maybe more. If people switch their diets to cheaper products, the effect would still be at least $1,100. This will add almost 1% to inflation.
The effects will hit quickly as the U.S. imports a lot of fruit and veggies from Mexico in the winter and less in the summer. Best Buy CEO Corie Barry said this week that her company will have to raise prices since the top two sources for the products her company sells are China and Mexico.
A round of price increases directly after Trump has imposed tariffs will give Democrats excellent talking points. A Democratic representative can carry around a cucumber or a broccoli or a cauliflower and say vegetables like these and others are suddenly going to cost you more at the supermarket due to Trump's tariffs so the government can raise more revenue to offset the big tax cuts for billionaires. That is not quite as effective a case of produce-as-a-political-prop as the Liz Truss head of lettuce, but it's not bad. (V)