Trump’s proposed tariffs—and the trade war that they could trigger—will be an unmitigated disaster for US consumers and agrifood companies alike, predicts former Congressman Charlie Dent. “If he goes ahead, it’s going to have enormously consequential and negative impacts on American manufacturing and agriculture.”
Dent, a Republican who represented Pennsylvania’s 15th District in the US House of Representatives from 2005 to 2018, now serves as senior advisor to Our Republican Legacy, a group founded by Republicans including John Boehner and Mike Pence to promote “unity, the Constitution, fiscal responsibility, free enterprise, and peace through strength.”
A critical piece of this is free trade, said Dent, who argues that both major political parties in the US have shifted away from globalism and multinationalism in recent years in favor of a more protectionist stance.
Under Trump, he told AgFunderNews, the Republican Party has “become much more populist, and it’s increasingly an illiberal populism that focuses on protectionism, isolationism, nativism, and sometimes nihilism, and I don’t think it’s particularly healthy. If there’s a MAGA [“Make America Great Again”] philosophy, I think that might be it, and I just think it happens to be a dead end.”
‘The President has pretty broad authority to impose tariffs without Congressional authority’
Speaking to us about President Elect Trump’s proposals for a 10-20% tariff on all goods coming into the US, a 50-60% tariff on goods coming from China, and tariffs of 25% to 200% on goods coming from Mexico, Dent added: “The President has pretty broad authority to impose tariffs without Congressional authority.
“When I served in Congress during the first Trump administration, I was pushing to require that tariffs enacted in the name of national security [under Section 232 of the Trade Expansion Act] would require a vote of Congress, so we put a bill in to try to enforce that. Of course, it didn’t happen. My view is that under Article One of the Constitution, Congress has power of the purse authority, and a tariff is a tax, so why would there be so little Congressional authority over a real matter of revenue?”
Asked whether he believed Trump would go ahead with universal tariffs as proposed, or whether his rhetoric was designed to serve as a threat to US firms considering offshoring or a negotiating tactic with trading partners, Dent said: “It’s hard to say, I think he intends to go ahead, but he’s going to receive very real pushback from a lot of his own [party] members, because the consequences of across the board tariffs on friend and foe alike will have enormously consequential and very negative impacts on American manufacturing and agriculture.”
‘Last time I checked, cocoa is not grown in the United States’
In the long run, he claimed, tariffs could shrink the size of the economy and drive inflation because US consumers will end up paying for more expensive imported goods and protected goods from higher-cost domestic producers, leaving them with less income to spend elsewhere.
He added: “I represented [confectionery giant] Hershey in Pennsylvania, which produces 70 million Hershey’s kisses a day, and last time I checked, cocoa is not grown in the United States, nor will it be [as a result of proposed tariffs].
“If the price goes up 10 or 20% there’s no simple substitute, so tariffs will just increase the cost of making products made here. Hershey’s Kisses are also wrapped in fine aluminum foil, which mostly comes from Canada, Europe, South Korea, and China. How is this helping American manufacturing to be competitive?”
‘Things could spiral out of control very badly’
The US also imports a lot of oil from Canada, so if that costs more due to tariffs, it could increase operational and transportation costs for US manufacturers, he claimed. “These are just a few examples, but multiply this and look where it gets us. And that’s before we get into retaliation. If we go after Mexican imports, they’re going to turn around and slap tariffs on American corn, and we send a lot of corn to Mexico.
“It doesn’t take a rocket scientist to figure out that things could spiral out of control very badly,” added Dent, who claimed that the market was beginning to recover from the 1929 stock market crash in 1930, until President Herbert Hoover imposed tariffs on 20,000 goods coming into the US, a move frequently cited as a cautionary tale of how protectionist policies can backfire, especially during periods of economic fragility.
Contrary to Hoover’s expectations, claimed Dent, the tariffs raised the cost of imported goods for already cash-strapped US consumers and reduced demand for American exports as 25 countries responded with retaliatory tariffs.
“Yes, the United States ran a lot of trade surpluses during the 1930s but did anybody care when unemployment was over 20%? Once you start these trade wars there really are no winners, and there are going to be a lot of losers, including people who work in manufacturing and agriculture.”
Targeted tariffs
As we have seen recently in the case of pea protein imports from China, which some US producers have argued is being dumped in the US “at less than fair value and subsidized by the government of China,” we already have remedies in the form of targeted countervailing duties, Dent observed.
“I’m not against tariffs [per se]. When there is dumping or slave labor or other illegal subsidies [that give overseas producers an unfair advantage] there are reasons to impose tariffs on a targeted, selective basis, usually in response to something that someone else has done. But as a mechanism to raise revenue for the government and as a matter of economic growth, I think this is bad policy.”
Overall, he said, “It’s inflationary, because it simply adds to cost, and it will negatively impact growth.”
“The United States can never out-subsidize and out-tariff the Chinese. We should be trying to open markets for American producers and playing to our strengths. We have 5% of the world’s population and about 20%+ of global GDP; we didn’t get there just by selling to each other.” Charlie Dent
USMCA: ‘There’s going to be a line miles long outside the Department of Commerce’
Asked about the impact of blanket tariffs on Mexico and Canada, which are part of the United-States-Mexico-Canada Agreement (read more about this here and here), he said: “Such tariffs imposed on Canada or Mexico would fly in the face of the very agreement Trump signed. So it would be very disruptive to this trilateral trade agreement that has integrated the North American economy to a significant degree.
“So what will happen is the Trump administration will be forced to grant exemptions all over the place; there’s going to be a line miles long outside [the Department of] Commerce of people seeking exemptions, and if the government is going to need to issue them, as is likely, why even have the rule in the first place?”
That said, the Biden administration, which retained most of the tariffs imposed during the Trump era, particularly those targeting Chinese imports, has adopted a more protectionist stance that discourages foreign direct investment in the US, he claimed.
“Right now in Pennsylvania, Nippon Steel out of Japan wants to acquire US Steel, and one of the few things that Biden, Harris, and Trump all agreed on was that they were going to block that deal [the decision has been deferred]. It’s incoherent, and jingoistic. If they don’t get that investment to bring in technology and capital, those plants will likely shut down over time.”
Farmers were ‘being paid because they can’t sell their product’
Food security came into sharp focus during the COVID-19 pandemic and is also impacting food and ag policy in countries especially concerned about the impact of climate change of their ability to feed their people, he said.
But imposing trade barriers—especially those that impact goods the US is unlikely to start producing domestically in huge quantities any time soon (shrimp, cocoa, coffee, vanilla, cinnamon, aluminum, plastic resins, glass containers, tropical fruits)—won’t make food more affordable, he claimed.
Meanwhile, while the US is an “agricultural powerhouse” that “mostly” feeds itself, it also exports huge amounts of corn, soybeans, almonds, beef, poultry and wheat, he noted. “These exports will be taxed through retaliatory tariffs as we saw in Trump’s first term [in which US tax dollars raised by the tariffs, which were paid by US importers, were then used to create a fund to support US soybean farmers and others hit by the move].
“As Republicans, we were trying to limit the need for payments and subsidies to farmers, and this just takes us in the opposite direction; basically, they’re being paid because they can’t sell their products.”
‘This is going to chill relations with a lot of countries’
He added: “I get the protectionist instincts and impulses, and we need to make sure we are protecting national security and strategic interests, that certain things are not being made in China. But why would we do things to harm our friends and allies?
“This is going to chill relations with a lot of countries. It would seem to me that in order to maintain strong relations, particularly with allies, we should maintain good trade relations.”
Asked why he felt many farming communities supported Trump given concerns about trade policy and access to labor, he said: “Some of it is cultural [Trump has greater support in rural America], and I think many of the farmers see the Trump administration as more friendly on the regulatory side. But there will be plenty of farmers and people in rural America that will feel the impacts of these tariffs. Rural communities could even suffer more if this leads to bank failures and other stresses on the rural economy. He is playing with fire.”
>>Do you take an opposing view? Please share your thoughts on tariffs, and what you would like to see from the incoming Trump administration, in our short survey.
Further reading:
How will Trump and Harris’ diverging agendas impact food, trade, and public health?
How would Trump’s tariffs impact large food & beverage firms? And what about USCMA?
The post Trump’s tariffs won’t help US agrifood industry, says ex-Congressman Charlie Dent: ‘There are no winners’ appeared first on AgFunderNews.
发布者：Elaine Watson，转转请注明出处：https://robotalks.cn/trumps-tariffs-wont-help-us-agrifood-industry-says-ex-congressman-charlie-dent-there-are-no-winners-3/
