On top of the tariffs on Mexico and Canada set to go into effect at the end of the month the Trump administration is also planning on invoking reciprocal tariffs on all countries.
This is in an effort to level the playing field for the U.S. in global trade but what does it mean for agriculture?
Dan Basse, president of Ag Resource Company, says these tariffs are different than those that were imposed during the first Trump administration or even recently with the 10% increase on China imports.
He says trade officials will go through with each trading partner and look at different commodities code line by code line to determine the imbalances in trade.
“You know, we’re talking like 300 ,000 additional code lines. This will take a long period of time, but I’m hopeful that countries are thinking about their trading position with the US. And in really commodities, particularly like ethanol or renewable diesel, biodiesel, or maybe LNG, these are commodities that every country needs. And this could be a real boon for the U.S.
Basse says Vietnam is a good example because the country has a trade surplus with the U.S. and needs to buy additional product.
“It imports around 8 million metric tons of corn. Let’s say half of that corn comes from the United States with a deal to cut that deficit. That would be something we haven’t had before and would be positive for U .S. agriculture. So when you think about reciprocal, we in the United States want to have a level playing field, the same tariff rate for, let’s say, Vietnam corn in U .S. corn, maybe it’s at 6 % or 7%, but also we need to get rid of the trading surpluses or deficits and kind of even it out with the U .S., that could mean additionality for U .S. imports.”
How will the agricultural and outside markets handle this kind of change in trade policy?
Basse says, “I think the markets are gonna struggle to best understand how that all comes forward. Normally tariffs have been bearish in agriculture, if you think about it, because we worry about it being a tax. Taxes, of course, hit prices and with prices rising people import less. But in reciprocal tariffs, it could be a lot different. We could have trade deals going forward that would assure the United States farmer a demand profile,” he explains.
He thinks U.S. agriculture could see an improvement in its export portfolio, but it will take time and so farmers need to let it play out.
