Trade wars between the United States and much of the world are expected to inflict more pain on Kansas businesses and consumers in coming months, especially if President Donald Trump adds to his list of taxes on imports.
Tariffs are explained different ways by different politicians, but they are basically taxes imposed on things that companies want to import into the United States. These taxes can be applied to raw materials, manufacturing parts, livestock, fiber, grains, food, retail goods, professional services whatever U.S. officials dictate.
The purpose of tariffs historically was to raise revenue for the federal government and to protect American businesses from overseas competition. Trump is not the first president to impose tariffs, but he is the first in modern history to use them as his go-to, all-purpose tool.
Since taking office, Trump has issued a nonstop series of threats and has imposed numerous tariffs. Our top three trading partners Canada, Mexico and China all have been targeted with higher tariffs, none of which was approved by Congress.
Also, Trump decided tariffs should not be applied evenly. For example, tariffs were slapped on steel and aluminum imported by U.S. companies, but Trump exempted some nations and some companies. So steel imports from Canada and Mexico went down, as U.S. businesses instead bought from companies in Brazil and South Korea, which were exempted.
Often those countries targeted with tariffs retaliate with tariffs on U.S. exports, such as grain, beef and other goods. So Kansans not only pay more for imports, but they find export markets closed or damaged.
Initially, Trump said his tariffs would eliminate the trade deficit. The president said his policies would ensure that the United States exported more goods than it imported. Federal reports show the trade deficit is at least 15 percent higher than it was before Trump took office.
For Kansas, the numbers show faltering export markets that affect both agriculture and manufacturing.
Because U.S. farmers raise more wheat, corn, soybeans, cotton and livestock than Americans can consume, they need international markets to stay in business. Demand for U.S. agricultural goods had grown significantly since the approval of NAFTA in the 1990s. That multi-national pact and others helped agriculture markets grow internationally.
Overall, Americans import more than they export, but the United States exports more ag products than it imports. At least for now. The once-big plus could turn into a negative if we continue to lose overseas business.
U.S. ag exports are down 7 percent for the fiscal year, compared to fiscal year 2018, according to federal data.
Tariffs arent the only reason for declining ag exports, but Trumps trade wars have created unstable ground for American farmers. Countries weary of dealing with higher taxes, uncertainty and U.S. threats are turning elsewhere for more reliable business relationships.
In response to the damage caused farmers by tariffs, Trump has announced at least two rounds of special payments to producers. Government checks are no substitute for growing export markets. They seem more like the kind of socialist programs about which Republicans used to complain.
The same sort of disconnect between principle and practice is seen as Republicans claim to oppose tax increases. Yet, they support tariffs, which are a series of new taxes foisted on American businesses and consumers.
In a piece for Bloomberg, Laura Davison writes that, for many Americans, tariffs have wiped out savings from the Republican tax cuts. The average American family saved roughly $930 because of the tax cuts, according to the piece, but they have paid about $830 more for goods because of tariffs.
