Will Trump tariffs benefit agriculture trade?

Ronald Baumgarten served as the Deputy U.S. Trade Representative for Southeast Asia and the Pacific during the first Trump administration. These days he practices law for BakerHostetler, where he handles international trade cases, including many related to the ag industry. He expects Trump’s trade policies to be broadly similar to his first term. But this time they will likely pack more of a punch.

Baumgarten notes Trump seems to be pushing more strongly for tariffs than last time. Still, campaign rhetoric is one thing. What actually happens in terms of executing those plans is something else.

“I’m sure they (Trump’s team) are very aware of this and working on the plan as to how to implement tariff increases,” Baumgarten says. “But it’s something that can’t just be done with the stroke a pen on every single product. You have to do this with the balance of the existing authorities.”

The U.S. constitution gives Congress the authority to levy tariffs on goods. With Republicans in control of the Senate (and likely the House), Trump could conceivably push a tariff proposal through, giving him additional power. However, he could choose to bypass lawmakers.

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Trump previously invoked Section 301 of the Trade Act of 1974 to impose tariffs on China. That law authorizes trade sanction against countries that violate U.S. trade agreements or engage in acts deemed unjustifiable or unreasonable. Trump also involved a 1962 law to invoke a 25% tariff on steel imports.

President Biden also used Section 301 to expand tariffs on certain Chinese goods. On the campaign trail, Trump hinted at identifying other long-forgotten laws as justification for imposing more tariffs and policy priorities.

Of course, for farmers, concern lies not so much with how tariffs will be imposed, but rather how they will impact their operations. When Trump first imposed protective tariffs, countries like Brazil gained market share. According to USDA data, tariffs cost U.S. producers $27 billion in exports between 2018 and 2019. The Trump administration blunted the impact of those losses by distributing emergency funding to affected producers.

The U.S. has reported ag trade deficits in four of the past six years, including a record deficit this year. Trump says Biden trade policies are to blame for the growing deficit. According to Baumgarten, Trump will likely use tariffs, or even the threat of tariffs, as bargaining power over other countries that restrict U.S. ag imports. He notes the U.S. and China eventually took steps to end the trade war before COVID hit and Trump was voted out of office.

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“Even though there was a desire to go after them and penalize and protect, there was also a willingness to sit down and think about negotiations,” Baumgarten says.

Any country on the receiving end of tariffs will almost certainly retaliate. That would likely yield at least short-term pain for farmers. Still, Trump appears to be betting that negotiations from a position of strength will deliver better results for agriculture. We are about to find out if he is right.