American Farmers Are Paying For Trump’s Tariffs As Mexico Hits Back

06.06.18 2 weeks ago 7 Comments

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After months of argument, Donald Trump instituted high tariffs on aluminum and steel for Canada, Mexico, and the European Union. Almost immediately, those countries responded with retaliatory tariffs, and those will be felt across the country with higher prices. But one set of tariffs, in particular, from Mexico might be devastating to American farmers.

As Eater reports, Mexico has targeted tariffs that will hit Republican lawmakers right where it hurts, namely their voters’ pocketbooks. That means a doubling of tariffs on pork, among other things — which is expected to lead to losses to pig farmers of $100 million a year in Iowa alone. But cheese and whiskey tariffs will also hit at farmers and distillers, and the tariffs total $3 billion that US businesses will need to pay. Since 1994, under the North American Free Trade Agreement, or NAFTA, Canada, Mexico and the US have all agreed to not charge tariffs on each other’s products, so this is going to be a painful adjustment.

All this is happening because Trump thinks he can renegotiate NAFTA and since neither Canada nor Mexico, or for that matter much of America, are interested in such a deal, he’s trying to force the issue. But that’s likely to backfire; while America is one of Mexico’s biggest customers, buying 80% of its imports, it’s got a lot of leverage itself as the second-largest market in the world for American products. Republicans have also been attempting to act against the tariffs, although how that comes together is anyone’s guess.

Much of the focus here has been on the short-run effect: With a lot of pork to sell, and less demand overseas, domestic pork prices are dropping. But this puts strain on an industry where prices have been low for a while, making it harder to break even, and an all-out trade war would decimate farm states. If enough farms close, that would eventually mean permanent higher prices for everybody; after all, when there’s less supply and high demand, the price goes up. So, long after Trump is out of office, you might be feeling the decisions of his tariffs in the meat aisle.

(via Eater)

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