More On Trade: Some of the feedback following recent columns discussing international trade (start here for review) underscore the issue’s importance to beef producers. But in all those columns there’s been no mention of tariffs. We need to go there.
Please note, NONE of what follows is meant to be broader political commentary.
Check The Box: Political talking points present some major problems; they’re always: 1) overly simplistic, and 2) alarmist in nature. Check both boxes when R-CALF recently posed this question to readers: “How do we begin fixing America’s economy, an economy that has been offshoring manufacturing and production for decades…and that within just the past five years has become a net importer, of all things, food?”
According to R-CALF, the “correct” answer is tariffs. It’s a logrolling strategy: support our tariff and we’ll support yours. But tariffs are a solution in search of a problem.
Trade Balance: R-CALF’s “net importer of food” claim is likely derived from a recent USDA headline: “U.S. Agricultural import values outpaced export values in fiscal year 2023.” (see first graph below).
However, USDA dispels any notion of “offshoring” food production (with my emphasis on several key items):
[The] U.S. agricultural trade balance [dollars – not volume]…reflects changing consumer tastes, a robust economy, and a strong dollar, and is not an indicator of export competitiveness or import dependence. The U.S. consumer’s growing appetite for high-valued imported goods—such as fruits and vegetables, alcoholic beverages, and processed grain products—has contributed to the expanding trade deficit. Those goods often include products that can’t be easily sourced in the United States, such as tropical products or off-season produce. In contrast, nearly 40 percent of U.S. exports are bulk commodities, whose prices respond more rapidly to global markets.
Tariffs are a solution in search of a problem.
Detail Matters: Several other things of importance here:
- USDA’s data reflects all agricultural products – it’s not “food” per se (e.g. the data includes cut flowers and pet food);
- The trade balance reflects dollars - not volume;
- Import values declined in 2023 versus 2022 (-$3.1B);
- Export values were down even more (-$21B - hence the shift in the trade balance). (Bulk commodities - wheat, corn, soybeans and cotton - accounted for nearly 80% of 2023’s decline in export value - in line with the emphases above.) (see second graph)
Acme Corporation: IF the trade balance is the concern (as a reminder, it’s positive for the beef industry), and IF most of last year’s change is due to exports, THEN tariffs are a non-starter. They’re more like some Wile E Coyote scheme and all the zany Acme Corporation products he purchased to get the Road Runner. Every time…they failed (disastrously – Wile E Coyote never stood a chance). Tariffs are a solution in search of a problem.
Beef Industry Take-Home: I received an email last week from a Montana producer voicing some frustration about international trade. The last sentence expressing his “…worry that the imports will gradually keep rising…”. I responded with this:
I understand you may “worry” about imports – that’s not an unusual position around all sorts of topics regarding trade. But it’s that worry why I write these columns – that is, to provide some context and measure to ensure you can spend your energy and effort on other things that likely matter more to your success.
Back to talking points; they do nothing more than stir emotion and rally your constituency. But is that really helpful? When it comes to trade – especially for the beef industry - if you’re hearing a tariff siren, it’s likely a false alarm. Tariffs are a solution in search of a problem.
Bananas In A Snow Storm: Back in 2013, I wrote a column in Feedstuffs about an incident after flying into Pittsburgh on my way to West Virginia. I explained it like this (if only I had taken a picture!):
Just outside of Pittsburgh, in the middle of a snowstorm, I stopped at a grocery store to get something to eat. As I walked into the store, I passed an elderly gentleman who was exiting the store with a single sack of various items and a bundle of bananas. The image was powerful; the paradox stopped me dead in my tracks. The availability of fresh bananas against the backdrop of a snowstorm in Pittsburgh in January speaks volumes about the bounty of our food and transportation system.
I’m pretty sure all of us, as consumers, would prefer there be neither disruption nor added cost to any of that bounty. Tariffs are a solution in search of a problem.
