It’s crunch time for tariff and trade negotiations. President Trump has stated he won’t extend the 90-day pause on tariffs meaning countries had until July 9 to show good faith in negotiations or face higher tariffs.
On Monday, 14 countries received letters indicating tariff increases of 25% to 40%, including Japan and South Korea.
However, the President also signed an Executive Order delaying the implementation of the increased tariffs until Aug. 1.
Frayne Olson, extension crops economist with North Dakota State University says that provides some wiggle room.
“So, we do have a couple of weeks to try and get some kind of an agreement in place, at least, again, an agreement in principle. It doesn’t have to be the full contract or the full trade agreement, but some kind of agreement in place before August 1.”
Without a deal, tariffs currently at 10% will go back up to the 20% to 49% set on April 2.
The biggest concern lies with Japan and South Korea, who face 25% additional tariffs as they’ve failed to make concessions on ag trade, including rice.
Olson says, “As we start getting really close to the end here, some of these ag products are now rearing their head as being some of the negotiating and sticky portions for these agreements. So, again, that’s why the anxiety is starting to rise.”
The key, he says, is none of these countries have signaled counter measures.
“We haven’t had any retaliation. There’s still time to get some kind of an agreement in place, but the time is running out very quickly,” he says.
So, what are the odds U.S. trade negotiators will reach agreements with these countries?
Joe Glauber, senior research fellow, International Food Policy Research Institute says he’s optimistic about Japan and South Korea because the stakes are high.
“I mean, there’s a lot of impetus for Japan and South Korea to try to get an agreement on some sort of framework agreement.”
But Glauber admits if there is retaliation from these two important trading partners various U.S. ag sectors could be seriously hurt.
“Yeah, both Japan and Korea certainly the grains would be hit very hard, oil seeds would be hit hard in, and soybeans are tough because we are facing, you know, we have this problem right now with China. We have a 23 % tariff on our, on facing US beans going into China. “
Glauber points out, even with the deals already announced with the U.K. and Vietnam, few details are known and these are not full blown binding trade agreements only frameworks.
“So again, you know, what’s of interest to me, you know, is what’s the enforcement for these agreements? How does it work going forward? I mean, again, we’re hoping for the best, obviously, that this results in more access for U .S. farm goods. But you want something that’s lasting as well, not just something that goes for, You know six months or a year or whatever.”
And so in Glauber’s opinion, its too early to know whether or not U.S. agriculture will truly benefit from any of these trade agreements.
