One of the most controversial hallmarks of the Trump administration has been the use of tariffs, and the president revealed this week he has no intention of backing off the aggressive trade tactic – not even with allies Mexico and Canada, who are retaliating with tariffs of their own on billions of dollars of U.S. agricultural goods.
President Donald Trump, speaking Monday at an event in the White House Rose Garden to laud the renegotiation of the North American Free Trade Agreement, said the talks were only successful because of his willingness to hit allies with steep tariffs, and promised that he’ll continue to use the import taxes despite complaints from farmers and lawmakers.
“No. No. The steel (tariff) is staying where it is -- and aluminum,” Trump said when asked by reporters if he intended to remove the tariffs now that a trilateral deal had been reached with Mexico and Canada. The tariffs will stay in place, he added, “Until such time as we can do something that would be different -- like quotas, perhaps -- so that our industry is protected. We are not going to allow our steel industry to disappear. It was almost gone.”
That came as a surprise to many. The Trump administration had originally tied the metal tariffs to the NAFTA talks. Ag Secretary Sonny Perdue made it clear when Trump announced in March that he was going to levy tariffs on steel and aluminum, the planned exemptions for Canada and Mexico would be due to the ongoing NAFTA talks.
“We’ve got a lot of flexibility built into the tariffs,” Perdue said at the time. “We’re going to use this to get NAFTA done.”
And when those exemptions were lifted two months later, hitting the two countries as well as the European Union with the tariffs, Commerce Secretary Wilbur Ross confirmed it was a reaction to the fact that the NAFTA trade talks had stalled.
At some point between May and Monday, this week, the tariffs on Mexico and Canada became a separate issue from NAFTA (now renamed the United States-Mexico-Canada Agreement, or USMCA). And it was on Monday that Trump said how much he values the ability to hit countries with tariffs to force new trade deals and protect domestic industries.
“Without tariffs, there would be no new NAFTA,” Trump said in the Rose Garden, flanked by Perdue, Ross, U.S. Trade Representative Robert Lighthizer and others. “Without tariffs, you wouldn't be - we wouldn't be standing here."
Although Trump said because of the new deal “there will be a better spirit between the three countries, which is important for our farmers,” that spirit will be diminished if the U.S. doesn’t remove the steel and aluminum tariffs on Mexico and Canada soon, according to Mexican government and U.S. farm sources.
“The true measure of success will be the day when our markets regain full trading status,” said Angela Hofmann, deputy director of the group Farmers for Free Trade. “That’s why we will continue to urge the immediate removal of tariffs that are taxing American ag exports and making farming more expensive, including the U.S. imposed steel and aluminum tariffs on Canada and Mexico.”
Mexico’s retaliatory tariffs are particularly harmful to the U.S. agriculture sector. The country continues to maintain the import taxes on U.S. pork, cheese, apples, potatoes and other commodities, but Mexican trade officials tell Agri-Pulse the country is prepared to drop those immediately if the steel and aluminum tariffs come down.
And that’s exactly what people like California Farm Bureau President Jamie Johansson want.
“We’ve seen California farmers, ranchers and agricultural marketers lose sales because of the retaliatory tariffs from Canada, Mexico and in particular from China,” Johansson said. “Until those tariffs come off, farmers won’t see the full benefit of the new U.S.-Mexico-Canada Agreement.”
The U.S. dairy industry is being hit hard, now that Mexican importers have to pay tariffs ranging between 20 and 25 percent on all U.S. cheese.
“We want the tariffs to be lifted,” said Jaime Castaneda, senior vice president for trade policy at the U.S. Dairy Export Council. “We’re still not better off if the tariffs on Mexico are there … because they are retaliating.”
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But Trump is now stressing that tariffs are some of his favorite trade-making tools. It was tariffs and the threat of more tariffs that spurred Japan to relent to U.S. demands for a free trade agreement, the president said.
“I said, ‘You don't have to negotiate, but we're going to put a very, very substantial tax on your cars if you don't,’” Trump explained. “And we're totally prepared to do that if they don't negotiate. But Japan is wanting to negotiate.”
In the case of China, Trump stressed his confidence that the escalating tariffs are helping him win that war that’s taken a toll on U.S. producers of soybeans, wheat, corn, pork, beef, sorghum, dairy, fruit, vegetables and tree nuts. The U.S. first hit China with steel and aluminum tariffs and then began levying more taxes to punish the country for intellectual property theft. China is retaliating on just about every U.S. farm commodity.
In fact, Trump said he was delaying the negotiating process with China on purpose.
“As you know, we have $250 billion at 25 percent interest with China right now, and we could go $267 billion more,” Trump said. “And China wants to talk very badly. And I said, ‘Frankly, it's too early to talk.’ Can't talk now, because they're not ready. Because they've been ripping us for so many years. It doesn't happen that quickly. And if, politically, people force it too quickly, you're not going to make the right deal for our workers and for our country. But China wants to talk, and we want to talk to them.”
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