Industry groups: End ‘tit-for-tat’ tariffs and return to ‘zero-tariff North American trade’

From the pork products that come from Kansas to the soaps made in Ohio, the specter of retaliatory tariffs looms large among the Midwest’s economic sectors that rely on trade with Canada and Mexico. Many of the affected industry groups continued in early 2019 to try to get their voices heard among U.S. trade leaders.
One of their latest outreach efforts: A letter signed by a diverse group of more than 40 organizations — including the National Corn Growers Association, the U.S. Chamber of Commerce, the National Pork Producers Council and the Association of Equipment Manufacturers — urging a return to “zero-tariff North American trade.”

Some observers have predicted that the Trump administration will lift some of the tariffs it began to impose on steel (25 percent) and aluminum (10 percent) in 2018. As of early March, though, that had not happened.

Without this change, retaliatory tariffs from Canada and Mexico will continue, while adoption of the new U.S.-Mexico-Canada Agreement (USMCA) becomes less likely. In February, after meeting with high-level officials from Canada and Mexico, U.S. Sen. Chuck Grassley of Iowa, chair of the Senate Finance Committee, said he doubted those two countries would OK the USMCA without a change in tariff policy.
President Trump began imposing these tariffs on national security grounds, saying the U.S needed to save its steel and aluminum industry. Canadian and Mexican firms have been hurt by these tariffs, as have some U.S. companies — namely those that buy foreign steel and aluminum for the manufacture of their products. 
Canada and Mexico responded to the U.S. actions with tariffs of their own.
In January 2019, Purdue University’s Department of Agricultural Economics found that retaliatory tariffs on agriculture are expected to cost this U.S. sector about $1.8 billion annually. That far outweighs any benefits from the USMCA. Pork and corn, key exports for the Midwest’s farm economy, are among the U.S. farm products being targeted for retaliation.
Half of all U.S. manufacturing jobs, meanwhile, depend on trade in some way. Last summer, in its analysis of the impact of retaliatory tariffs, the U.S. Chamber of Commerce concluded that a mix of this region’s manufacturing and agricultural industries would be most impacted by “escalating tit-for-tat trade actions” (see table).

 
 
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Stateline Midwest: March 20192.35 MB