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Down on the Farm: More Hysteria About Steel Tariffs

The selective free traders (people who support protectionism that benefits high-income people, but oppose it when it can help ordinary workers) are pulling out all the stops in going after Trump's steel tariffs. Today, the NYT takes the show to rural America where it tells us how much agriculture can be hurt by a trade war.

We meet various farmers worried about the threat of a trade war and get a few random facts thrown in:

"Three out of every five rows of soybeans planted in the United States find their way out of the country; half of those, valued at $14 billion in 2016, go to China alone."

"Two weeks after the administration imposed a tariff on solar panels, China opened an anti-dumping investigation into American exports of sorghum, a grain used in livestock feed. The United States was virtually China’s sole foreign source of sorghum last year, with $1 billion in sales."

There are a few points worth making here. First, if our trading partners do impose barriers to US exports of agricultural goods, then we would see the price of these products fall somewhat in the domestic market. That is bad news for these farmers, but good news for the rest of us who will have lower priced food. The NYT apparently only thinks of consumers when it comes to tariffs raising prices.

The second point is that while the loss of a large market can have a substantial impact on the price of a relatively small volume crop like sorghum since it is a relatively small volume crop the number of farmers affected will be relatively few. Furthermore, most will be able to switch to crops that offer a better return.

CEPR / March 10, 2018