April 19, 2018
The NYT had yet another piece about the potential political fallout if China retaliates for Trump’s tariffs by imposing tariffs of its own on US agricultural exports. It noted that farmers in some states could turn against the Republicans, highlighting the Senate race in North Dakota in today’s paper.
It is striking that it seems no one is mentioning the benefit to US consumers from lower food prices that would be implied by lower farm prices. While the actual savings may not be very large, the higher prices that consumers would likely see as a result of Trump’s tariffs on steel and aluminum also are not very large. Nonetheless, there have been many news articles on the costs of these tariffs, it is peculiar that the NYT and other papers have no interest in discussing the flip side of the coin when it might show a positive side to the tariffs.
As I have noted elsewhere, the actual impact on farm prices is likely exaggerated. If China reduces its purchases of a particular crop from the US, then it presumably increases purchases from another country. If this third country shifts its exports from somewhere else to China, then there is a market opening up to our farmers in somewhere else. The net effect is still likely to be negative for US farmers (the trade story in a world without tariffs is almost certainly more efficient than the world with tariffs), but it is just not true that if China doesn’t buy the stuff, they have to throw it in the garbage.
None of this to say that I think Trump’s tariffs are a good idea (I don’t), it just would be best if we could try to keep the discussion of them serious.
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