For Immediate Release: May 23, 2024

Contact: R-CALF USA CEO Bill Bullard

Phone: 406-252-2516; r-calfusa@r-calfusa.com

 

Please find below R-CALF USA’s weekly opinion/commentary that discusses the recent announcement to increase tariffs on Chinese imports, which represents a return to using tariffs as a legitimate economic tool. It is in three formats: written, audio and video. Anyone is welcome to use it for broadcasting or reporting.

 

Duck! Before the Pendulum Hits You

Commentary by Bill Bullard, CEO, R-CALF USA

The Biden Administration just announced it would be increasing tariffs on about $18 billion of imports from China. The Biden Administration is increasing China tariffs above what the Trump Administration initially imposed on Chinese imports when Trump was in office.

That means there’s a new bipartisan movement underway to use tariffs as an effective economic tool to achieve fair and balanced trade and protect American workers, manufacturers, and perhaps farmers and ranchers from excessive imports. It’s about time!

You see, America’s industrial and agricultural strength was achieved in large part by two types of tariffs: revenue tariffs and protective tariffs. Revenue tariffs are just that – an economic tool that enables a national government to generate revenues with a tax on imported goods, which then offsets the government’s need to tax its own citizens.

Much like the fuel tax that we all pay for the privilege of accessing our domestic highways, a tariff is a tax on foreign goods for the privilege of accessing our domestic markets.

If during the last century the United States had continued utilizing tariffs as a legitimate revenue source rather than casting them to the seas in favor of globalization, which is also known as free trade, then the revenue stream our treasury could have received from tariffs would have reduced the need for our government to continually ratchet up income taxes paid by U.S. citizens.

You see, the unstated trade-off for replacing revenue tariffs with globalization’s free trade was that under free trade, U.S. citizens could buy lots of cheaper imported stuff, thus freeing up more of their money for the government to tax. So, tell me how that’s worked out for you.

The other tariff type is a protective tariff, and its function is to stimulate and promote domestic production in industries vulnerable to losing sufficient market share when their output is undercut by excessive imports; or, in industries vital to our national security and for which we desire a high level of self-sufficiency or complete self-sufficiency.

Now that’s what tariffs are and what they can do if used effectively. But for the most part, the U.S. turned its back on this important economic tool decades ago and threw its saddle on globalism’s free trade. As a result, the U.S. has lost millions of good paying manufacturing jobs and hundreds of thousands of farmers and ranchers.

But the pendulum is finally swinging back and it’s time to reacquaint ourselves with this tried and proven economic tool. Tariffs are the critical tool needed to reshore our offshored manufacturers, stimulate domestic production, avoid future inflation, and reduce our dependence on foreign supply chains. This tool can help us achieve fair and balanced trade, offset currency misalignment, and preserve and protect industries vital to our national security, including food security.

Let’s look at a few imported products and consider how tariffs might apply.

Bananas and Kiwis: Well, we do grow some of these popular fruits in the U.S., and that’s good, but we don’t grow much. Is a protective tariff needed for banana and kiwi producers in Hawaii and Florida? I honestly don’t know. I would think though that they are likely able to compete in the U.S. by distinguishing their product with a “Grown in the USA” label – a country of origin label, which may enable them to maintain or even grow their currently small domestic market share. But a revenue tariff certainly makes sense as it should be obvious that having steady access to a market with 335 million fruit eaters is highly profitable to foreign banana and kiwi growers.

Lamb and Mutton: Now here’s an industry decimated by excessive imports that arrive at prices U.S. sheep producers can’t match. As a result, about 70 percent of the lamb and mutton consumed in America is now imported. Over 60 percent of our nation’s sheep inventory and full-time sheep producers here just four decades ago are gone today. We’ve waited too long, and we’ve threatened our nation’s food security. Protective tariffs are needed, along with an import quota to give our domestic sheep industry the opportunity to recover from the failed globalization experiment.

Cattle and Beef: On average, the U.S. lost 16,000 cattle farms and ranches each year for the past four decades. The losses accelerated during the past five years when another 107,000 beef cattle operations exited the industry. Yet, we import about 2 million head of live cattle each year and about 3.5 billion pounds of beef. Each of those 2 million head of imported cattle were birthed by a mother cow on a farm in a foreign country. It’s clear that those 2 million mother cows bred and calved on foreign soil displace cows that could be bred and calved in the United States. It’s equally clear that the 3.5 billion pounds of imported beef displaces production opportunities for domestic cattle producers; and equally clear again that imports are a contributor to the ongoing exodus of U.S. cattle farms and ranches. Protective tariffs are warranted here so America can maintain a high level of self-sufficiency in its production of natural protein, and that’s beef and lamb.

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R-CALF USA’s weekly opinion/commentary educates and informs both consumers and producers about timely issues important to the U.S. cattle and sheep industries and rural America. 

Ranchers Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) is the largest producer-only trade association in the United States. It is a national, nonprofit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle and sheep industries. For more information, visit www.r-calfusa.com or call (406) 252-2516.