If tariffs are meant to deter imports by making them more expensive, eventually imports will decrease. Logic would have it, then, that depending on tariff revenue in the long-term would be folly, as it’s intended to decrease over time.
The tariff-income-as-monetary-policy is just one sticking point in the U.S. administration’s new trade policy arc. Oliver Ward, international editor for Agri-Pulse, says that there’s also an implied shift to a preference for bilateral trade deal versus multi-lateral or broader trade frameworks.
In this discussion that was part of last week’s webinar on trade and tariffs, Ward outlines several of the hurdles this current administration is putting up over trade.
Ward says that the pace at which Trump 2.0 is moving is much faster than the first administration and that the focus on trade balances and reciprocity is a new lens to view trade through. What’s also interesting is that tariffs and the threat of tariffs is being used to further non-trade goals, such as decreased drug movement or immigration.
It is true that using tariffs as a negotiation tool is a policy “in tension” with depending on the revenue, he says, but at least for now the U.S. farmer seems to be taking the wait-and-see approach. Ward says that many in the agriculture sector are willing to give Trump some leeway in this short term pain for long-term gain rhetoric, at least for now.
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