OAK PARK, Ill. – Amanda Countryman, assistant professor of agricultural economics at Colorado State University and former research economist for USDA’s Economic Research Service, thinks farmers should be very concerned about the potential effects of retaliatory tariffs on export trade. Speaking during Farm Foundation’s March 18 “State of the Agricultural Union” (SOAU) conference, Countryman examined how current U.S. trade policy around agriculture is taking shape.

“President Trump after taking office announced his ‘America First’ trade policy. The focus of the current U.S. administration’s trade policy is to prioritize a production economy focus with three specific goals. The goals of this trade policy focusing on production are to increase manufacturing share of GDP in the U.S., to increase real median household income and to decrease the goods trade deficit,” said Countryman, who earned a doctorate in agricultural economics at Purdue University and a master’s in ag economics at Texas A&M before going to work for USDA.

“Some of the policies being considered can affect these three goals. One of the first approaches the president plans to implement is to increase import tariffs. If we impose import tariffs, at the end of the day this is a market distortion that creates a price wedge between our domestic price and the world price. That has the potential to benefit import-competitive industries, but can be at the detriment of consumers and exporters, especially when we consider a situation where we face retaliation in other markets,” she continued.

Retaliatory tariffs are additional taxes placed on goods that are imported into the U.S., making those products more expensive. Increased import prices lead to less imported goods, creating less competition in the domestic market that could potentially benefit producers. And while the government does collect tariff revenue, consumers lose “on the whole,” according to Countryman.

“When we have freer trade we have lower price levels overall in the economy, driven by competitive advantage. When we focus on what we’re relatively better at, and we partially specialize and export those products, that allows us to import products for those things that we’re relatively less efficient at producing,” she said. “Consumers lose when we have import tariffs when we think about the economy as a whole, because we will have higher price levels. There are also mixed worker and producer effects.”

Those effects include job creation loss and job destruction. On the other hand, import tariffs can be job-boosting for import-oriented industries. Conversely, their effects on producers and export-oriented sectors can be challenging.

“If U.S. exports become less competitive or more expensive, that means that we are likely to export less because other countries are going to seek alternate suppliers who are relatively more affordable. We’ve learned from experience with the prior trade war that it was extremely challenging for U.S. agriculture,” said Countryman, whose areas of expertise include trade reform, WTO policies and the effects of trans-boundary animal diseases on global markets.

To compensate farmers for lost revenue resulting from the Trump administration’s first trade war, the federal Market Facilitation Program in 2018 and 2019 provided $23 billion in emergency relief. In addition, the Food Purchase and Distribution Program provided $2.6 billion, and the Agricultural Trade Promotion Program paid around $300 million to farmers over the two-year period. Countryman advised farmers not to count on such ad hoc relief this time around.

“We already have $10 billion in economic assistance that is going to be distributed, as well as an additional $20 billion in disaster relief that is targeted for U.S. agriculture, so it’s uncertain if we face a retaliatory trade environment in the weeks and months to come if there will be a future trade aid package,” she said. “It’s uncertain what the domestic trade policy response may be if we end up in a situation where we face retaliation.”

Global geopolitical events and the United States’ uncertain trade relationship with China will be other top issues for farmers to monitor regarding trade policy and commodity prices, Countryman noted, along with exchange rates and strong competition from South American exporters.

“There is currently a lot of uncertainty around U.S. and global trade policy,” she said. 

In closing, Countryman said that the U.S. has seen an increase in the export of high-value agricultural products. In FY 2024, around 68 percent of total U.S. agricultural trade (minus bulk commodities) was considered a high-value product; that percentage is expected to increase to about 70 percent this year.

“When we think about opportunities on the U.S. side, there are certainly opportunities for continued growth in high-value agricultural commodities,” she said.