First Tariffs, Then Subsidies: Soybeans Illustrate Trump’s Wrongfooted Approach on Trade

07/30/2018

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Chad P. Bown & Eva (Yiwen) Zhang | Peterson Institute for International Economics

The Trump administration’s trade wars, which President Donald Trump has said are “easy to win,” encountered a setback in July in what might be called the Battle of the Soybeans. Suddenly the administration was scrambling to find new markets for soybeans in Europe, a dubious proposition, and to spend federal funds to protect American farmers from the retaliation provoked by the administration’s reckless tariffs. The soybean skirmish illustrates the utter wrongheadedness of the president’s approach to trade. Two policy wrongs illustrate the point. First, on July 24, the administration announced plans to subsidize American farmers for up to $12 billion for their suffering of lost export sales resulting from the president’s own escalating tariff actions. Trump’s 2018 tariffs-to-date on steel, aluminum, and China have caused the European Union and five other major trading partners to implement retaliatory actions affecting $27 billion of US agricultural sales to the world. Trump’s tariffs suddenly put 20 percent of total American agricultural exports at risk…

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