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For obvious reasons, most of the attention thats been paid to President Donald Trumps various tariff schemes has focused on the across-the-board tariffs hes imposed on our biggest trading partners, Canada, Mexico, and China.But Trump has another, even more elaborate, and more costly, tariff scheme that he plans to roll out next monthone he alluded to a few days ago in a Truth Social post he wrote to the Great Farmers of the United States. Trump told the farmers to get ready to start making a lot of agricultural product to be sold INSIDE of the United States because tariffs will go on external product on April 2nd.Trump was referring to his plan to put reciprocal tariffs in place on all U.S. imports, meaning that he will impose tariffs on other countries imports that are equal to the tariffs they impose on us. So, if a country has a 30% tariff on coffee, Trump will put a 30% tariff on all coffee imports from that country.Reciprocal tariffs may seem intuitively appealing, simply because theyre a tit-for-tat policywell do to other countries what theyre doing to us. But the reality is, theyre a disastrously bad idea, especially when it comes to agriculture.To begin with, reciprocal tariffs require us to inflict harm on American consumers and American businesses that rely on imported goods just because other countries are willing to inflict harms on their consumers and businesses in order to protect local industries. Thats a little like jumping off a bridge just because other kids are doing it. A reciprocal-tariff plan also effectively allows other countries to dictate our trade policy, which is not something the U.S. should let our trading partners do.Higher prices, zero payoffReciprocal tariffs are particularly bad when it comes to the very thing Trump focused on in his post: farming. Thats because Trumps plan will result in raising tariffsand therefore consumer pricesnot just on food products that we could, theoretically, produce more of in the U.S., but also on food products that we dontand, in some cases, realistically cantmake at high volumes. As Trumps post suggests, he wants his tariffs to lead to American farmers growing more.But in many cases, all these reciprocal tariffs will do is make consumers pay more for food, without having any real impact on domestic production.Take, for instance, coffee and tea. At the moment, the U.S. has no tariffs on so-called green-bean coffee imports, while countries that we import coffee fromlike Brazil, Colombia, and Indonesiaoften have meaningful tariffs on coffee imports into their own countries. But since we export very little coffee, that doesnt hurt the U.S. (The only coffee grown here is in Hawaii, and its a tiny amount relative to how much coffee we consume.) In other words, the tariffs those countries impose on coffee have no real impact on the U.S. economy.The same is true of tea. We import almost a half-billion dollars of tea a year because the U.S. has never been a tea-producing nation. (Almost all the tea we do produce is grown on small farms.) So the fact that tea-producing countries have tariffs on tea imports, again, has no meaningful impact on the U.S. economy. Their tariffs dont limit U.S. tea production or the number of tea-producing jobs. From our perspective, theyre more notional than real.The problem, though, is that Trump doesnt care. Even though these countries coffee and tea tariffs dont really matter to us, Trump is going to put equivalent tariffs on our imports of their coffee and tea. And that will matter quite a lot to U.S. coffee and tea drinkers, and to the businesses that sell coffee and tea, all of whom are now going to be paying much higher pricesfor no good economic reason.The same is true of many of our fruit and vegetable imports. The U.S., for instance, has a very small banana industry, in large part because our climate is not ideally suited to banana growing. (Most of the bananas we do produce are grown in Hawaii.) So we, of course, import almost all our bananas. Trumps plan will, again, make us pay more for bananas, without resulting in a big boom in U.S. banana production.We also import billions in fruits and vegetables year-round from places such as Mexico, not just because of cost, but because weve gotten used to being able to eat whatever produce we want whenever we want (rather than having to eat only the fruits and vegetables grown when theyre in season). Raising tariffs on strawberries is not going to lead to a huge boom in U.S. strawberry-harvesting in December. But it will lead to our having to pay higher prices on strawberries.Yes, we have no bananas At its core, what Trumps reciprocal-tariff plan ignores is the reality of what economists call comparative advantage; namely, that its economically beneficial for everyone if countries focus on what they do best, relatively speaking, rather than trying to do everything.Comparative advantage is especially important in agriculture, simply because of the realities of climate and soil. The U.S. is great at growing grains, raising livestock, and growing certain fruits and vegetables. But it makes more sense for Brazil and Colombia to grow coffee or Honduras to grow bananas, and for us to import themthan for the U.S. to try (futilely) to become a coffee- and banana-growing powerhouse.On top of all this, while the reciprocal-tariff plan is not going to do much to help American farmers, the myriad trade wars Trump has already started are very likely going to hurt American farmers, who, in 2023, exported $174 billion of agricultural products (including most notably, grain and feed, soybeans, nuts, livestock, and some fruits and vegetables).Thats because when we impose new tariffs, our trading partners dont sit by quietly: They retaliate. Chinas finance ministry, for instance, announced that it will be imposing new 10% to 15% tariffs on imports of U.S. soybeans, chicken, pork, and beef. And Canada just imposed 25% tariffs on billions in U.S. goods, including orange juice, peanut butter, and wine, and will impose tariffs on beef, pork, dairy, and fruits and vegetables in three weeks if Trump hasnt lifted his tariffs by then.Retaliation is not a trivial problem. People have somehow forgotten this, but Trumps trade war with China in his first term resulted in U.S. farm exports dropping by nearly $26 billion. Trump covered for it by redirecting Department of Agriculture funds to recompense the farmers, but all that meant was that U.S. taxpayers effectively paid the price for his love of tariffs.Trade wars are good and easy to win, Trump has famously said. But the reality, especially when it comes to agriculture, is that they are pointless conflicts in which just about everyone loses.
