How Trump's Dangerous and Misguided Trade War Could Reshape the American Diet
During the 2016 presidential campaign, Donald Trump made his protectionist views clear, saying that, if elected, he would renegotiate trade deals. He slammed the North American Free Trade Agreement (NAFTA) as "the worst trade deal the U.S. has ever signed." He also criticized the Trans-Pacific Partnership (TPP), saying it was "the death blow for American manufacturing" and that it "put[s] the interests of foreign countries above our own."
Just three days after entering the White House, Trump withdrew the U.S. from the TPP. A few months later, his administration drafted an executive order to withdraw from NAFTA, which is currently being renegotiated.
Then in March, President Trump's attack on trade continued when he announced a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, tweeting, "We want free, fair and SMART TRADE!” The legal basis for such tariffs, the administration claimed, was national security.
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy w… https://t.co/OEgFJVYtCs— Donald J. Trump (@Donald J. Trump)1519906362.0
EU leaders scoffed at the idea of tariffs. "The EU and U.S. are friends and partners," said European Council President Donald Tusk, who chaired an EU summit last month in Bulgaria to discuss the tariffs. "Therefore U.S. tariffs cannot be justified on the basis of national security. It is absurd to even think that the EU could be a threat to the United States."
While Trump's plan could benefit some steelworkers who have been negatively impacted by the massive expansion of China's production over the past two decades, the fact is that American workers in industries that consume steel far outnumber those in steel production. As of January, Business Insider reports, only 415,000 Americans worked in primary-metal manufacturing (which includes steel and aluminum) and metal-ore mining.
"Just for context that is only about 2 months' worth of job gains or an extremely small 0.28 percent of total jobs," Tom Porcelli, RBC's chief U.S. economist, told Business Insider. "Yet the folks in downstream manufacturing (i.e. the consumers of steel) employ 16x (!) as many people. Now, the negative impact from these tariffs on those downstream industries from a margin and employment perspective is difficult to predict, but it is rather obvious that the winners/losers ratio seems extremely skewed…"
What could also be lost are certain foods and drinks from American dinner tables. For one thing, tariffs on foreign steel and aluminum could negatively impact food and drink manufacturers who rely on those metals to fabricate containers for their products. In addition to automakers and homebuilders, reports Business Insider’s Akin Oyedele, "[B]eer brewers have pushed back against the move because they rely on steel and/or aluminum to make their products. They're concerned that tariffs would raise their costs of production and ultimately be passed on to consumers."
"Higher prices of inputs for products such as cars, air-conditioning units, refrigerators and beer cans will be passed on to consumers," notes The Economist. "If they respond by buying less, jobs will be lost."
But specific foods—not just their containers—have been caught in the crossfire of the developing trade war. On June 20, the European Commission said it will start imposing a 25 percent import duty on a range of American products—including sweetcorn, peanuts, bourbon and orange juice—in response to the Trump's tariffs on EU steel and aluminum.
"We do not want to be in this position," EU Trade Commissioner Cecilia Malmstrom said in a statement, adding that Trump's "unilateral and unjustified" decision forced the EU's hand to strike back. Other U.S. food products that could be subject to retaliatory EU safeguard duties include rice, maize, kidney beans, peanut butter, cranberries, cranberry juice, lemons, orange oils and extracted oils of licorice and hops.
The EU decision comes on the heels of Mexico's own retaliatory strike, announced earlier this month, imposing tariffs between 15 and 25 percent on a range of American products, which will increase the price of a number of foods, including pork, potatoes, apple, bourbon and several kinds of cheese. Mexico is the largest market for U.S. pork exports.
China made their own retaliatory strike by enacting tariffs on a number of American products, including a wide range of foods. U.S. pork products entering China, for example, will face a 25 percent tax, while wine, fruit and nuts will notch an additional 15 percent penalty. Trump quickly responded, threatening an additional $50 billion in levies on Chinese imports. Then China shot back with their own a threat of 25 percent tariffs on even more U.S. agricultural products, including soybeans, wheat, sorghum, corn and corn products, beef and beef products, cranberries, orange juice, and tobacco and tobacco products.
The Sino-American trade war has since escalated from threats of action to dates when these latest proposed hikes would go into effect. In May, the Trump administration suspended its plan to impose tariffs on China while the nations pushed forward with trade talks. "We're putting the trade war on hold,” Treasury Secretary Steven Mnuchin said on "Fox News Sunday." But then in June, Trump decided to go ahead with plans to hit China with tariffs starting next month.
While a U.S.-led trade war on several fronts could rattle the global economy (it has already led to stock market losses), regular consumers—and their everyday diets—are also casualties. Just as tariffs on imported foreign goods could raise prices for American consumers, taxing exported U.S. goods could also do the same. Dr. Scott Brown, an assistant extension professor of agriculture and applied economics at the University of Missouri, recently connected the dots in an interview with Fortune.
If U.S. pork products, for example, are hit with a 25 percent tariff, that increases the price for Chinese customers, who will respond by buying less of them, or not buying them at all, Brown explains. That means reduced profits for American farmers. He says that such a loss would force producers to either seek new markets or produce less pork. And that could result in domestic price increases.
Marketwatch reported that an "excess of inventory” could actually lead to a drop in domestic prices, particularly for products that can't be easily be downshifted in terms of production—like nut-producing trees that take several years to grow before becoming market-ready. But for most products, ramping down production is an obvious market response.
"We could, long-term, see a little higher pork prices here in the U.S., as U.S. producers adjust down production in response to [lower prices]," Brown said.
That same dynamic could occur with any of U.S. product facing higher export duties once reaching foreign shores, potentially impacting Americans across the dietary landscape—not just bacon lovers, but also tofu-loving vegans. John Heisdorffer, a farmer in Iowa and president of the American Soybean Association, warned that the proposed tariffs will have a “devastating effect” on farmers of soybeans, the main ingredient in tofu, a staple of the vegan diet.
"We regret that the administration has been unable to counter China’s policies ... in a way that does not require the use of tariffs," he said in a statement.
"A 20 percent tariff eliminates our ability to compete effectively in Mexico," Jim Heimerl, the president of the National Pork Producers Council and a pork producer from Johnstown, Ohio, told CNN. "This is devastating to my family and pork producing families across the United States."
"It is hard to imagine how U.S. farmers would be better off as a result of a trade war," says Marilyn Borchardt, interim director at the Institute for Food and Development Policy. Considering the threat of higher food prices here at home, it’s also hard to imagine how Trump’s trade war would benefit Americans' dinner plates.
However, higher pork and beef prices in the U.S. could be a silver lining for Americans if it means reducing their intake, since red meat increases the risk of dying from eight diseases. Still, a trade war that disrupts the global economy, harms manufacturers, farmers and workers—and angers long-term trading partners—is probably not the best way to improve public health.