How Tariffs Will Impact Farmers and Consumers

Since the beginning of April, President Trump has announced a number of new tariffs on countries around the globe, most notably China. While exactly which tariffs will remain in place long-term is changing day-to-day, the trade war with China appears to only be escalating. This is certain to have major impacts on the agriculture industry, and the consumers who rely on it for food.

Trump’s tariff plan, as originally announced, contained two different “layers.” The first was a 10 percent tariff on exports from all countries, while the second was an additional, “reciprocal” tariff on 60 specific countries. The reciprocal tariff rates differed from country to country, and were ostensibly going to be applied to countries with large trade deficits with the U.S.

Just hours after the tariffs took effect, however, Trump reversed course and announced a 90-day “pause” on the reciprocal tariffs. The first layer of tariffs remains in place, however.

In the same announcement, Trump said that tariffs on China will be increased to 125 percent. This comes after the Chinese government, as widely expected, imposed retaliatory tariffs on American exports in response to Trump’s initial announcement.

How the Tariffs Will Impact Agriculture

Trump’s tariffs will have major impacts on a wide swath of American industry, and agriculture is no exception. The exact nature of those impacts, however, may not be what the president is expecting.

Ultimately, the goal of tariffs is to incentivize domestic production and disincentivize imports — in other words, to reduce international trade. But this is a mistake, says Andrew Muhammad, professor of agricultural and resource economics at the University of Tennessee Knoxville.